Analysis and Trading based on Envelopes, Waves, Cycles

Which is most interesting is the parallel you can do between Elliott and Hurst.

What is Hurst trading and analysis philosophy ?

Good old Jim analysis and trading philosophy is summarized in a little booklet Cyclic Analysis 32 pages published in 1974. You know the story* "Hurst the father of Cyclic Analysis"*

In Cyclic Analysis (32 pages) good old Jim uses 220 times the word "Wave" and only 55 times the words cycle, cyclic, cyclical.

Good Old Jim use 4 times more the word Wave ( average 7 times per page) than the word Cycle.

If you really read Hurst accurately Hurst rarely uses the term Cycle but much more the term Wave.

Hurst in Cyclic Analysis gives us a definition of a Wave ( in short a Swing Up and a Swing Down) what most calls erroneously a "Cycle" (old habits never die).

From memory Hurst defines a Cycle as the repetition of a Wave

Consequences :

a) An Elliott "Wave" is not a Wave
b) without repetition there is no "cycle"
c) not said by Hurst - operationally you need to have at least 3 samples of the same "wave ( period + amplitude). The first two to establish it exists a "cycle" within Price Action and you hope for a third sample to trade it

let's quote Edward Dobson of Traders Press in his Publisher Comments of Cyclic Analysis : "After reprinting Profit Magic and the Hurst Cycles Course, and sending copies to Hurst, he advised me that in 1974 he had authored a book which gave an overview and summary of the main points of the course. He very graciously offered me the rights to reprint that material, and this resulted in the book you are now reading.

let's quote Hurst : The relationship between past and future prices is found to be complex and nonlinear. Current simplified models represent price movement as consisting of a linear combination of wave functions with specific and consistent interrelationships. This viewpoint has led to the development of **the Wave Theory of Price Action

From this Wave Theory,** a body of practical applications methods called Cyclic Analysis has been evolved which permits a fully integrated and wholly technical approach to the problem of trading and investing successfully in the stock and commodity markets.

Hurst refers explicitely to Elliott : This viewpoint is based on the Wave Theory of Price Action, and the landmarks of development are indicated by the following events:

~1) 1938. Ralph Nelson Elliott published his well-known monograph “The Wave Principle.” (3)

let us quote Hurst again : Unexpected results were obtained in the course of computerized spectral analyses of this data.*

It was found that price movement can be described as a complex combination of periodic functions with specific interrelationships.

This work has continued to the present, resulting in a Theory of Irrational Decision Processes. 3. 1971. An outgrowth of the Theory of Irrational Decision Processes was the Wave Theory of Price Action. A book was published by the author describing practical applications of Wave Theory to the timing of stock market transactions. (4)

6. 1971. Computerized aids to Wave Theory *analysis of stock and commodity price histories became available for public use. (5) %: 1973. The first complete description of wave concepts as applied to the capital management problem was published. (6) *

Note that good old Jim does not use the word Cycle.

Excerpts from Jim Hurst "Cyclical Analysis" : WAVE FUNCTIONS AND RELATIONSHIPS IN PRICE MOVEMENT

The Wave Theory of Price Action is embodied in a set of eight Basic Principles of Cyclicality as described in reference 6. The most significant relationships involved have to do with waves, the elemental building blocks of periodic processes.

An ideal wave (shown in figure 1) varies smoothly and uniformly about a value of zero, alternately assuming positive and negative values.

One complete repetition of a wave is called a cycle.

Only three parameters are required to completely characterize a wave (see figure 1)

1. Period, the length of time elapsed from trough to trough 2 Amplitude, the size of the wave from trough to crest 3. Phase, the time position of the wave with respect to any given reference time. In figure 1 the phase parameter has been transformed to the more useful quantity phase difference, which is a measure of the relative position in time of one wave with respect to another. The most important wave characteristic is periodicity. As one cycle of a wave is completed, another identical cycle is commenced. It is readily apparent that once the three basic parameters of a wave are known, the value of the wave can then be ascertained for all possible values of time— including the future. It is this ingredient of the Wave Theory of Price Action *

by the way

EURUSD 1

Hour Envelopes Methodology helps you to rationalize the Classification and hierarchization of your Waves

How Hurst see Cycles and Waves

This is like a mini course in cycles or should i say waves !! Lot to digest. When using envelopes I start seeing these waves but I try and capture almost each movement. Because if I have to understand waves i need to understand it fully. If i understand it fully every move should be predictable. Is there a way to look at only significant movements or specific patterns only ? Example you show double tops and bottoms- should one wait patiently only for these patterns before making an entry ? With waves why isn't every move predictable ? I mean some are rhetoric questions - I know it will be impossible to predict every move but i want to be closer to that.

is this reasonable trade which I closed earlier.

you got the idea

My view on GOLD

Babysteps parisboy,
TP hit for the last one .... OMG ... i am lucky or what

just a potential scenario

FLD based entry crude 5 min:

BNP Daily

Crude 5 min short