Time triads creating H&S fractals

Time triads recreating head and shoulder fractals is a step closer to rewriting the Elliott Wave Theory

We have talked about head and shoulder on prior occasions. We have also mentioned that time is a head and shoulder (H&S). The time pattern was first illustrated by Tony Plummer in his book. Plummer mentioned that a stylised pattern of time was a good example of fractal geometry.

Plummer’s stylised time pattern
He did not give a formal pattern proof of creation for the stylised pattern. Where did the stylised pattern come from? How could it be seen across time frames? And how was it fractalled?

Orpheus introduces time triads
Here we have taken the Orpheus Time Triad unit and reworked on it to create the stylised pattern Plummer first illustrated in his book. The stylised pattern looks like a head and shoulder. Time Fractals, Time Triads, Time Arbitrage, Econohistory, Performance Cycles are terms coined by the author in January 2009.

The idealised time triad structure is made of equilateral triangles. There are three equilateral triangles, making a larger triangle and so on. Time subdivides in three and multiplies in three. What is with the formation? First and foremost: Head and Shoulder are three peaks, a large peak centered around two smaller peaks. Head and shoulder pattern is the time triad i.e. three triangular peaks.

Did you ever think why a day has four prices, the open, the high, the low and the close? We just take it as standard. Ok! It does look logical to have the O-H-L-C, but the interesting part is how this classification divides the trading session into three parts. There is a part with the open and high, high and low, low and close.

The three triangles of head and shoulders are there. Market literature is full of pattern ideas from human anatomy. It’s not just by chance that we find similar patterns in markets like we find in human anatomy. We find head and shoulders in markets just like we see it in human body is because time touches anatomy, the same way it transforms price.

Nature unlike markets doesn’t just move in the first Cartesian quadrant with positive x and y axis values. Nature moves in all dimensions, in free space. Fabian Helge von Koch (1870 – 1924) was a Swedish mathematician who gave his name to the famous fractal known as the Koch snowflake, one of the earliest fractal curves to be described. The Koch snowflake (or Koch star) is a mathematical curve and one of the earliest fractal curves to have been described. It is based on the Koch curve, which appeared in a 1904 paper titled “On a continuous curve without tangents, constructible from elementary geometry”. The Koch curve starts from a Triangle and in the second iteration divides each side of the triangle into a head and shoulder form. The iterations are repeated and this creates the Koch curve. Koch curve is a zooming head and shoulder bombarding in your eyes like a moving spatial star field.

Rewriting Dow Theory
The Head and shoulder pattern can even rewrite the Dow Theory and even explain the Elliott Theory. Elliotticians are known to famously quote that there are few rules in markets, mainly the EWT (Elliott Wave Theory) works on guidelines. The only two rules in the long standing Elliott Theory is that the 3rd wave is never the shortest of the three impulsing waves 1, 3, 5. What Elliott unknowingly said was that the three up legs in a five legged market structure have a bump or a head; simply putting, the middle part of a market fractal is larger than the other two.

The 3rd is never the shortest because of the Head and Shoulder. The pattern of time rules the Elliott fractal. There is another rule of Elliott that the 2nd wave does not make a new low below the low of the 1st. The head and shoulder pattern of time also makes higher lows and not lower lows. A higher degree of time does indeed make more significant lows than its small degree counterparts.

So what did we do with the Time triads? We gave the smallest triangle a size of 1 unit (X). 3 units made a larger triangle (3X) and nine units made the larger triangle (9X). At all times these unit lengths are adding or subtracting. Assuming there is no translation. That is largest time is not effecting the smaller time. Putting simply, the bear market is the same in potential and scope as the bull market, the markets will behave ideally, losing all the gains it made, a classic cycle.

Doing an aggregation of three degrees viz. X, 3X and 9X, we reached the Head and shoulder pattern. And as we added a higher degree head and shoulder fractals started to form.

The author is a Chartered Market Technician and CEO, Orpheus CAPITALS, a global alternative research firm