Question of the Week: 9/5/2005

Is it possible to predict the percentage wave-4 will retrace of wave-3 after wave-2 has ended?


YES, but this is not part of orthodox Elliott Wave theory. Under NEoWave, if you start with 100% and substract the percentage that wave-2 retraced of wave-1, what you have left is a very good approximation of the percentage wave-4 will retrace of wave-3.

For example, if wave-2 retraces 30% of wave-1, wave-4 should retrace around 70% of wave-3 (i.e., 100-30=70). That type of behavior is likely to produce a 5th Extension or a 5th wave failure). As another example, if wave-2 retraces 90% of wave-1 (only possible in Terminal formations), then wave-4 will retrace around 10% of wave-1 (don`t forget, in a Terminal, even if wave-4 is only 10% of wave-3, wave-4 must still share some of the price range covered by wave-2, which is called "overlap.").

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