Question of the Week: 10/25/2006
Since triangles occur frequently, but are often misinterpreted, what clues exist to tell you a pattern, which looks like a triangle, is not a triangle?
Based on detailed NEoWave guidelines, the early determination of whether a Flat, Triangle, Diametric or Symmetrical is forming is based on the price, time and complexity relationships between waves-A and B.
Under NEoWave, in all Triangles where wave-B is at least 61.8% of wave-A in price, wave-A will be the most violent (i.e., it should cover the most price in the least time). That does not mean it is the largest wave, just that it moves the fastest from high to low (or from low to high). As a result, in any A, B sequence where B is at least 61.8% of the price of wave-A, but wave-B takes less time than wave-A, then a Flat, Zigzag or Triangle is NOT forming, leaving only Diametrics and Symmetricals as a possible option. What is even more likely is what you are calling wave-B is actually wave-a of wave-B.
In NEoWave Triangle variations (i.e., outside the realm of R.N. Elliott's original discoveries) where wave-B is around 38.2% of wave-A, wave-B will take LESS time than A. As a result, in any A, B sequence, where wave-B is around 38.2% of wave-A in price, but wave-B takes MORE time than wave-A, a Triangle is NOT forming, but a Zigzag could be forming. As wave-B approaches 61.8% of the price of wave-A, the time it consumes will increase. As it does, wave-B may equal the time of wave-A, but if it is less, only a Triangle, Diametric or Symmetrical is possible. As wave-B exceeds 61.8% of wave-A, it normally will take more time than wave-A; if it takes less, a Triangle, Diametric or Symmetrical is forming OR the rally you are calling wave-B is probably wave-a of wave-B.
In general, NEoWave theory tells us that the more SIMILARITY there is in price, time and complexity between adjacent waves of the same pattern, the greater the odds a NEoWave Symmetrical is forming. If time similarity exists between most of the waves, but not price similarity, a NEoWave Diametric is forming. If complexity is similar throughout, but not time and price, a Triangle is probably forming. If vast time, price and complexity differences exist between three adjacent wave segments, a Flat or Zigzag is forming. To decide, if wave-B is less than 61.8% of wave-A, call it a Zigzag, otherwise call it a Flat.
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