(۱۸۶) New Tips & Hints

In expanding Triangles, is it necessary for wave-d to “overlap” wave-b?

ANSWER:

In all Triangles (expanding, contracting or neutral), it is essential that a portion of the price range of wave-d “overlap” a portion of the vertical price coverage of wave-b. It is also possible (especially in expanding Triangles) that the entire range of wave-b will be “engulfed” by the price range of wave-d but such behavior is not mandatory.

(۱۸۵) New Tips & Hints

In a contracting triangle, can the e-leg be larger in price than the d-leg?

ANSWER:

The rules that make up a contracting Triangle are as follows…

۱- Wave-a must be the longest in price of waves-a, c & e

۲- Wave-e must be the shortest in price of waves-a, c & e

۳- Wave-d must alternate in multiple ways to wave-b (price or time or complexity or structure)

۴- Wave-d must trade at least part of the time in the same price range as wave-b

If the above rules are met, even if wave-e is longer than wave-d, then a contracting Triangle may be forming.

(۱۸۴) New Tips & Hints

Your book does not mention “leading diagonals” (i.e., a Terminal in the position of wave-1 or wave-a). Many Elliott Wave analysts recognize such patterns; do you think they exist?

ANSWER:

No, they don’t exist. Such assumptions are caused by the absence of a rigid, logical rule set in the original theory relating to post-pattern behavior requirements. Under NEoWave, every Wave pattern must follow an extensive list of rules for its labeling to be possible. Afterward, and most importantly, post-pattern price action must confirm the analyst’s assumptions by producing specific, defined behavior. The rigidity NEoWave brings to market analysis does not exist in orthodox Elliott Wave. That lack of rigidity is the cause of many inaccurate forecasts and false structural assumptions, such as “leading diagonals” and W-X-Y pattern groupings. In the second example (W-X-Y), I don’t even know why that was created because it is completely unnecessary and can cause foundational, orthodox Elliott Wave rules to be broken.

(۱۸۳) New Tips & Hints

It was my belief that no leg of a Triangle, except for wave-e, could itself be a Triangle. Am I correct?

ANSWER:

In 1990, when I released Mastering Elliott Wave (MEW), that was also my assumption. The statements in MEW were derived from 7 years of personal experience trading, forecasting markets and teaching Wave analysis. At the time of MEW’s release, I had only witnessed one bull market and the start of one bear market; so, my market experience was limited. During the 25 years following its release, I’ve discovered neutral Triangles, 3rd-extension Terminals, Diametrics and Symmetrical patterns. All those new Wave phenomenon are explained in the Education section of the new NEoWave website – https://www.neowave.com/product-book.asp). 

What I’ve come to realize, over 32 years, is that legs of a Triangle (if enough complexity is present) tend to mimic the behavior of the Triangle itself. So, if a Triangle is contracting, its last leg frequently contracts. If a neutral Triangle is forming, the c-wave or the e-wave has a strong tendency to produce a neutral Triangle. If an expanding Triangle is forming, wave-e has a propensity to form an expanding Triangle. 

As an important end note, if your chart contains so much complexity that you can see a smaller Triangle form as wave-a of the larger Triangle, then your chart is TOO complex and must be simplified to avoid the subjectivity that comes with high structural complexity.

(۱۸۲) New Tips & Hints

If wave-B (in any pattern) takes less time than wave-A, can I confidently assume a ZigZag or Flat is NOT underway but instead that a Triangle or Diametric is forming?

ANSWER:

Yes

(۱۸۱) New Tips & Hints

Is it necessary that all major tops complete with a violent reversal?

ANSWER:

At risk of comparing market action to the “Theory of Relativity,” the answer to your question is dependent on the technical expertise of the observer. There is the “visual appearance” of a market top and then the “structural, technical reality” of a market top. 

Visually speaking, from the lay-person’s perspective, a market can “look” as if it tops slowly or quickly, that it is followed by a violent reversal right off the highs or it slowly “falls off” the highs in a bowl-shaped fashion. 

Technically speaking, from a NEoWave perspective, patterns don’t always conclude at the high or low of a trend – they can finish “below highs” and “above lows.” When a market ends a psychological Wave pattern below a high, it may slowly top and not produce a violent decline right off the highs. But, if you begin your assessment of the “new trend” from the actual conclusion of the old trend, then YES “all major tops complete with a violent reversal.”

(۱۸۰) New Tips & Hints

If wave-5 subdivides (inside of a Terminal impulse), can part of it break the 2-4 baseline?

ANSWER:

Yes, if two conditions are met. Let’s assume the Terminal is trending upward. If you see part of wave-5 break the 2-4 baseline, make sure these two rules are followed:

۱٫ After the break, no part of wave-5 drops below the conclusion of wave-4. 

۲٫ The highest price of wave-5 is made before the break of the 2-4 baseline. 

For example, if wave-5 is a contracting Triangle, and wave-b (of that Triangle) breaks the 2-4 baseline, make sure the conclusion point low of wave-4 is not broken during any part of wave-5. If not, then rule 1 is met and wave-5 may still be forming. If waves-c, d & e all form inside the price range established by wave-a, then rule 2 is met and wave-5 (of a Terminal) may still be forming. Finally, if a significant market decline ensues after the conclusion of wave-5’s contracting Triangle, then it is safe to assume the entire Terminal was labeled correctly.

(۱۷۹) New Tips & Hints

I’ve been told if you ask 10 Elliotticians about the future, you’ll get 10 different answers. If so, why and does NEoWave solve this problem?

ANSWER:

What you stated was correct for the first 60 years of Elliott Wave history and was the reason I developed NEoWave. To be truly useful and accurate, Elliott Wave needed substantial upgrading and refining. Most of all, it lacked a comprehensive, rigid, logical foundation. If wave theory is to have ANY validity, its rules must give the practitioner the ability to produce a single wave count and forecast that can be replicated by others. 

In my book Mastering Elliott Wave (in hind sight I should have called it Mastering NEoWave), I address this long-standing problem of Elliott Wave. My book adds so many additional rules and concepts to the wave analysis process that it elevates it out of the realm of supposition and into the realm of science. The three most important concepts of NEoWave, which help to accomplish this goal, are:

۱- Logic (a strong correction must produce a future, strong move),

۲- Self-defining (a smaller pattern cannot take more price and time than a larger pattern),

۳- Self-confirming (strict requirements for post-pattern market behavior determine whether your prior structural analysis was correct – in other words, you do not decided if your analysis is correct, NEoWave RULES help you grade your assessments).

Without these rigid, logical NEoWave rules, analytical chaos ensues creating an environment where every wave analyst has a different count and opinion. With the addition of the above rules to orthodox Elliott Wave, you get NEoWave (that is, a “new” wave theory), which makes it possible to produce wave counts that stand the test of time. For example, in the back of my book Mastering Elliott Wave, there is a wave count projecting the future course of the U.S. stock market for 75 years (that forecast has been accurate for 23 years and still has 52 years to go)!

(۱۷۸) New Tips & Hints

Sometimes you measure time consumed by a pattern from its highest to lowest point. At other times, you measure from the beginning or end of a pattern. Why?

ANSWER:

The first and best method for measuring time in a pattern is to start at the highest and/or lowest points of the wave segment(s) in question and use that information to project or confirm a future turn. If that measurement proves unreliable, the next-best choice is to measure the time of a pattern from its lowest point – in an uptrend or its highest point in a downtrend – to the actual conclusion of the pattern (even if that conclusion is below a high or above a low). Use that measurement to project or confirm a future turn; if that projection also proves unreliable, your assumption about the pattern forming is probably wrong.

(۱۷۷) New Tips & Hints

In an expanding triangle, must the time of wave-c be longer than the time of wave-a?

ANSWER:

This may be the shortest response ever given on this service…the answer is YES. For whatever reason, the first leg of any contracting or expanding Triangle must be the most violent leg of that Triangle. When a neutral Triangle is forming, there appears to be some leeway regarding this rule, but it has applied to every expanding and contracting Triangle I’ve ever seen.