When numbering and
lettering waves, the scheme shown below is
recommended to differentiate the degrees of waves in the stock
market's progression:
The most desirable form for a
scientist is usually something like 11, 12,
13, 14, 15, etc., with
subscripts denoting degree, but it's a nightmare to read such
notations on a chart. The above table provides for rapid visual
orientation. Charts may also use color as an effective device
for differentiating degree.
In Elliott's suggested
terminology, the term "Cycle" is used as a name
denoting a specific degree of wave and is not intended to imply
a cycle in the typical sense. The same is true of the term
"Primary," which in the past has been used loosely by
Dow Theorists in phrases such as "primary swing" or
"primary bull market." The specific terminology is not
critical to the identification of relative degrees, and the
authors have no argument with amending the terms, although out
of habit we have become comfortable with Elliott's nomenclature.
The precise identification of
wave degree in "current time" application is
occasionally one of the difficult aspects of the Wave Principle.
Particularly at the start of a new wave, it can be difficult to
decide what degree the initial smaller subdivisions are. The
main reason for the difficulty is that wave degree is not based
upon specific price or time lengths. Waves are dependent upon form,
which is a function of both price and time. The degree of
a form is determined by its size and position relative to
component, adjacent and encompassing waves.
This relativity is one of the
aspects of the Wave Principle that make real time interpretation
an intellectual challenge. Fortunately, the precise degree is
usually irrelevant to successful forecasting since it is relative
degree that matters most. Another challenging aspect of the Wave
Principle is the variability of forms, as described through
Lesson 9 of this course. |
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