NEoWave™ Pattern Discoveries · Elliott’s original group. That missing pattern is the Neutral Triangle. Just like a 3rd wave Extension Impulse pattern, the middle wave (wave-c)

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NEoWave, Inc., 65 Enterprise, Aliso Viejo, CA 92656 • (800) 636-9283

NEoWave™ Conference and Workshop - 1995 • Ritz-Carlton ASPEN - Day 1

Copyright ® 1995 by Glenn Neely

NEoWave™ Pattern Discoveries

• Diametric Formations

• Neutral Triangles (wave-clongest)

• Extracting Triangles

• 3rd Extension Terminals

• 5th Failure Terminals

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Diametric Formations

I experienced my firstDiametric formation in1991. What started outlooking like aContracting Triangle,stopped behaving likeone when wave-ebecame larger thanwave-d. If wave-e hadmoved quickly enoughand far enough, I couldhave concluded thepattern as a Zigzag fromthe low in 1991. But, theproblem is that wave-edid not move quicklyenough out of thecongestion to indicateanything critical hadconcluded. That is whenI started to realize that anew wave phenomenonwas unfolding. It wassimply a process ofelimination.

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F

E

D

C

B

A

A Diametric Formationgenerally resembles the

shape of a Bow Tie.

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Neutral Triangles (wave-c longest)

The is a new variation in thiswell known group. It is themissing “link” that explainsmany heretofore indecipherableperiods of pattern development.A Neutral Triangle is thelogical missing formation thatdelicately connects theImpulsive world to theTriangular world. If youcompare 1st, 3rd and 5th waveExtensions to Triangularpatterns, there is a clear area ofbehavior not covered by R.N.Elliott’s original group. Thatmissing pattern is the NeutralTriangle. Just like a 3rd waveExtension Impulse pattern, themiddle wave (wave-c) is thelongest in a Neutral Triangle.Their characteristics are alsoextremely similar to 3rdExtension Impulse patterns. .

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B

A

D

E

Just like what you might witness in a 3rdExtension Impulse pattern, the“extended” c-wave of a Neutral Triangleis usually the longest, most subdividedand most time consuming of the three“trending” waves (i.e., waves-a, b, c).

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Extracting Triangles

This type of Triangle followsall the rules and variations ofthose previously listed. Theunique aspect of thisTriangular sub-category is thatthe alternation that is normallypresent in a Triangle (based onwhich wave is the longest) isreversed. This creates a VERYstrange looking formation thatcan be very difficult toanticipate (at least if yourexperience is primarily in the80’s bull market, which had acompletely different character).The only early warningbehavior characteristic I havebeen able to find relates towave-b. When the b-wave ofwhat looks like a Zigzag takesless time than waves-a or c, anExtracting Triangle is likely.

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C

BD

E

Notice that the upwaves(designated by up arrows)continuously contract fromleft to right - a contractingbias - while the down arrowsshow an expanding bias.

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3rd Extension Terminals

This pattern takes on astrange and difficult tointerpret structure that isusually discovered onlyafter its conclusion (orshortly beforeconclusion if the patternis large enough). This is what anExtracting Trianglelooks like. These are itscharacteristics. Here are someexamples.

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2

5

4

x3

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5th Failure Terminals

These patterns basicallymimic 3rd ExtensionImpulse patterns, exceptwaves-2 and 4 overlapand the internal structureof each move iscorrective, notImpulsive.

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2

5

4

3

Fibonacci ResistanceEstablished by larger

degree formations

Notice the conclusion pointof wave-5, it is right on the

Fibonacci level

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NEoWave™ Behavior Discoveries

• Expanding Triangles (spike atextremes)

• Neutral Triangles (evendistribution of behavior)

• Extracting Triangles

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NEoWave™ Behavior Discoveries(cont.)

• 5th Failure Terminals(Supplemental price)

• 5th Failure Terminals (severealternation)

• Common BEHAVIOR mistakesassociated with Impulsions

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Expanding Triangles (spike atextremes)

Expanding Triangles have astrong tendency to ”spike”when reaching the highest orlowest point of thetermination of each wave.This creates an identifiablecharacteristic that can beused to identify theirexistence in almost anymarket situation.observation. Detection of thisbehavior (price action“spiking” near the extremes)can help you decide whatkind of environment themarket is in even when anexact wave count is notobvious. Spike Low

Spike High

Spike High

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Neutral Triangles (even distribution ofbehavior)

Neutral Triangles aresome of the calmest,most consistentlybehaving patterns underNEoWave™ Theory. Ifthe market’s behaviorand style is not changingmuch, even if the marketis covering a lot of priceand time territory, that isthe environment of aNeutral Triangle.

C

B

A

D

E

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Extracting Triangles

The thrust out of anExtracting triangle is notas violent as thatexperienced by aContracting Triangle,but not as slow as that ofan Expanding Triangle.Based on our previousdiscussions, it should beobvious that the marketenvironment this patterncreates is that of aneutral bias.

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D

C

B

Each successive decline is smallerin price. Each successive rally islarger in price. This is the type ofbehavior that characterizes anExtracting Triangle. The mostimportant trait of this patternappears to be that wave-D is alwayslarger than wave-C and is usuallythe most complicated wave in thepattern from a visual standpoint.

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5th Failure Terminals (Supplementalprice)

All Terminals (and Triangles)experience what I callSupplemental Price and Timeaction. That is when themarket goes slightly beyondthe best calculated price andtime zones, only to reverseand do what was originallyexpected. Unfortunately, it isright at the end of this patternthat the average trader givesup, reverses his position, onlyto be stopped out. Shortlythereafter, the large trend hewas predicting ends uphappening WITHOUT him.

1

2

5

4

3

Fibonacci ResistanceEstablished by larger

degree formations

Notice the conclusion pointof wave-5, it is right on the

Fibonacci level

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5th Failure Terminals (severealternation)

This is among thestrangest and mostdifficult to decipherpatterns underNEoWave™ Theory.They are difficult to besure of even AFTERthey have completed.The pattern is so warpedby the extremedifferences in sizebetween waves 2 & 4that it is frequently onlypossible to identify themwell after theirconclusion.

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2

5

4

3

Notice the obvious differencesbetween waves-2 and 4 inprice/time and complexity.This is a critical feature of 5thFailure Terminals.

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Common BEHAVIOR mistakesassociated with Impulsions

Second advancetakes too muchtime in relation

to correctivephase

Second advance tooviolent, trend starts at

circled point

Wave-C (or 3)has not taken

enough time. Itshould be about

half of A+B (1+2)

1orA

2orB

3orC

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NEoWave™ Patterns

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NEoWave™ Patterns

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NEoWave™ Patterns

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NEoWave™ Patterns

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NEoWave™ Patterns - Revealed

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Extracting Formation

Each successive decline is smaller in price. Eachsuccessive rally is larger in price. This is the typeof behavior that characterizes an ExtractingTriangle. The most important trait of this patternappears to be that wave-D is always larger thanwave-C and is usually the most complicated wavein the pattern from a visual standpoint.

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1 21 41 61 81 101 121 141

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F

E

D

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B

A

Diametric Formation

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Neutral Triangle

Neutral Triangle

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B

A

D

E

Wave-C is the longest wave in thedirection of the trend. Wave-d is thelongest wave against the trend is usuallythe longest wave of the entire pattern.

During this period, the trend is down

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B

D

E

Documents

NEoWave™ Pattern Discoveries · Elliott’s original group. That missing pattern is the Neutral Triangle. Just like a 3rd wave Extension Impulse pattern, the middle wave (wave-c)