New Elliott Wave Rule Forums

Hello all,

To try to get my mind wrapped around EWP and NEWR rules, I’ve written what I think is the essence of EWP and the NEWR combined. I’d appreciate feedback and suggestions; particularly if a Rule is missing or incorrect.

Thanks,

Perry
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Rather than post a revised version of this message, I’ll make edits to this one based on the feedback I’ve received. I welcome more feedback. Thanks, Perry
Edited 7-4-10
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Elliott Wave Principal:

Stock market prices flow and ebb as a result of crowd behavior. That results in waves of price movement which advance and retreat. EWP calls the advances Impulse (or motive) waves and the retreats Corrective waves.

The waves are Fractal in nature, meaning each wave is made up of sub-waves which are similar in form. The Impulsive waves have 5 sub-waves. The Corrective waves have 3 sub-waves.

Again, each Impulse wave consists of 5 sub-waves which by convention are numbered: 1 impulsive, 2 corrective, 3 impulsive, 4 corrective, 5 impulsive. This is sometimes called a 1-2-3-4-5 wave pattern.
Or, because each of these sub-waves further divides into smaller sub-waves a 5-3-5-3-5.

Each Corrective wave consists of 3 sub-waves which by convention are lettered: A impulsive, B corrective, C impulsive. This is sometimes called an A-B-C wave. Or, because each of these sub-waves further divides into smaller sub-waves a 5-3-5.

Labels are placed at the end of each wave’s move.

[attachment=159]

Impulsive waves can take prices either up or down. Thus 1, 3, 5, A, and C are all impulsive waves.

While all waves follow the same pattern they can and do vary in amplitude (size) and time.

The wave pattern consisting of the 5 waves up followed by the 3 waves down is referred to as a cycle of 8 waves.

The cycles of similar magnitude are called degrees. In the image above the waves labeled [1] and [2] are of one degree. Which sub-divides into the waves labeled 1-2-3-4-5-A-B-C of the next lower degree.
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Wave Rules:

These rules apply to waves which make up the 1-2-3-4-5-A-B-C pattern (one cycle) of one degree.

Wave 2 will not retrace to or more than 100% of wave 1.

Wave 3 always travels beyond the end of wave 1.

The price move (percentage) of wave 3 is never the shortest of the
motive waves.

Wave 4 will not retrace to or more than 100% of wave 1.

In Every 5th Wave and in Every C Wave, the 4th Wave of the next lower degree WILL have a B Wave which will set New Trend Price Territory. This B wave is referred to as a “Retrending B” or more simply an “RTB” Wave.

There is no requirement for the end of an RTB 4th wave to retrace into the 3rd wave.

There is no limitation on the c wave of the RTB 4th other than it cannot move lower than the start of wave 1. It can go higher than 3 or lower than 3 and can enter wave 1's price territory.

To clarify both situations ( RTB 4ths in 5 and C ) OR ( non-RTB 4ths ) :

RTB 4th:
There is no restriction upon the movement of a 4th wave's trend (beyond 3rd) OR counter-trend travel or termination except that the termination of course may not exceed the start of wave 1. Also the RTB 4th wave's b wave of lower degree MUST exceed trend travel of wave 3.

Non-RTB 4th:
The 4th wave in all non-RTB waves must terminate less than the trend progression of the 3rd wave and not exceed the start of wave 1. It may have NO trend travel beyond that of wave 3.

The 5th wave must continue through to at least match the furthest price of the B of an RTB 4th of a 5 or C, or the furthest price of 3 in a non-RTB wave.

Within any specific wave no price within the wave may be beyond the end point of the wave, or before the start. For example, if wave 1 is part of an up trend, then no price within wave 1 can go higher than the ending price, or lower than the start of the wave. This does not apply to RTB 4th waves.

Great job Perry.

It is very encouraging to see the NEWR info recapped so completely.

I hear sometimes that it is hard to digest but also sometimes how
it makes so much more sense.

So by doing this you have shown it may be absorbed and blended
right in with the standard set.

Of course that is how it is intended to be used and I personally
think it would be extremely difficult to ignore once it has been
described.

Now in one of your paragraphs I removed a few words.

Where you wrote:

RTB 4th:
There is no restriction upon the movement of a 4th wave's trend
(beyond 3rd) OR counter-trend travel or termination except that the
termination of course may not exceed the start of
wave 1 of that 5th or C wave. Also the RTB 4th wave's b wave
of lower degree MUST exceed trend travel of wave 3.


I removed:

"of that 5th or C wave"

As it was worded it was inaccurate.

If you would not mind, your wave 3 needs to be showing that it is
not the shortest. ( Your waves are: 1 = 180px ; 3 = 144px ; 5 = 176px )

I did find it amusing that you depicted the wave 4 overlapping wave 1 though
outside this forum others would be mortified.


Also I would like it if you would clarify this, your very last sentence:

(Except for the NEWR 4th waves the end of the wave, the pivot point,
is the furthest price travel in the primary direction of that wave. )

Very Nice Work Indeed.
Thank You

BTW you may wish to read a blog post of mine called:



Elliott Wave Theory Not a Theory

Yo, respect :-)
In the EWI tutorial, expanded flats and running flats are always 3-3-5, meaning that A cannot be in five waves, or if it is, B cannot go beyond its start. Does that apply to rtb 4th waves as well? Or can A of an rtb4 be a 5 wave move?
Greetz, ruby-gal (Perry, you're really something.)

(07-02-2010 05:12 AM)ruby Wrote: [ -> ]Yo, respect :-)
In the EWI tutorial, expanded flats and running flats are always 3-3-5, meaning that A cannot be in five waves, or if it is, B cannot go beyond its start. Does that apply to rtb 4th waves as well? Or can A of an rtb4 be a 5 wave move?
Greetz, ruby-gal (Perry, you're really something.)

An A Wave is ALWAYS an Impulse and ALWAYS Subdivides into 5 waves.

There are NO exceptions to this.

Much confusion arose due to not recognizing the RTB and the actual
NON-EXISTENSE OF EXTENSIONS as has now
been identified in the NEWR.

(07-02-2010 12:37 AM)TS Hennessy Wrote: [ -> ]I hear sometimes that it is hard to digest but also sometimes how
it makes so much more sense.

This is how I see it.

Quote:Now in one of your paragraphs I removed a few words.

Thanks, I sometimes get too detailed/wordy.

I'll work on the drawing.

Quote:Also I would like it if you would clarify this, your very last sentence:
(Except for the NEWR 4th waves the end of the wave, the pivot point,
is the furthest price travel in the primary direction of that wave. )

What I was trying to say, for example, is that if wave 1 is trending up, then no price within the wave 1 can go above the end or below the start of the wave. This applies to all individual waves; except it does not apply to RTB 4th waves.

I think that’s true, if not that’s what I want to find out.

Quote:BTW you may wish to read a blog post of mine called:

Don't like the word "Theory”??? Ok, Principal!

Tom, thanks for sharing NEWR, the forum, and the feedback.

Ruby-gal, Thanks

Perry

Hm ... I think I need to read your e-Book again. What would really help - probably not only me - is a small collection of drawings, translating traditional pattern counts to NR counts, i.e. multiple zigzags, x-waves, diagonals, triangles. That would be really nice of you.

(07-03-2010 07:21 PM)ruby Wrote: [ -> ]Hm ... I think I need to read your e-Book again. What would really help - probably not only me - is a small collection of drawings, translating traditional pattern counts to NR counts, i.e. multiple zigzags, x-waves, diagonals, triangles. That would be really nice of you.

Actually I would think that would not be nice of me as it would possibly
limit the absorption which can only come from chart time.

The simple elegance does in fact do all the translating. Begin with a
simple 5 wave 3 wave and where you get to a 4th of a 5th or C, apply
the NEWR.

Just drop shapes and 'other' letters or multiple letters and try to forget
that confusion which entered in due to no recognition of NEWR and
the invention of extensions.

It will emerge quicker in your mind to pay no mind to the complex 'stuff'.

Tom- I think what he would like to see is an example of how you label a wave 4 "mess", something like we just had in the S&P from July 1 to 6. Here is my best guess, but there are so many overlapping waves it becomes difficult to count the detail.


[attachment=156]

(07-04-2010 05:37 AM)finster869 Wrote: [ -> ]Tom- I think what he would like to see is an example of how you label a wave 4 "mess", something like we just had in the S&P from July 1 to 6. Here is my best guess, but there are so many overlapping waves it becomes difficult to count the detail.

I have already labeled plenty of 4ths and let me say again that all 4th
waves are unique messes.

What was asked is taking someone else's 'traditional' count and labeling
according to NEWR. That is the Elliott Wave Technician's job.

The rules are what govern wave formation.

Doing it either right or wrong will be a learning experience of which this
technician will not deprive you. This is for your own good.

If nothing else the NEWR should show you that there exists a much
simpler and more elegant wave formation which is more distinctly
predictable than traditional rules as far as not having unknowns
always "out there waiting to happen".

IT ALSO SHOULD INFORM MORE DEEPLY OF THE IMMENSE COMPLEXITIES
OF MARKETS WHICH CAN KEEP SUCH SIMPLE ELEGANCE AND YET ILLUDE
SOME OF OUR BEST EFFORTS.

So the point of there being difficulty is nothing new nor will it be
anything but our constant companion. This is why I would do no one a
favor by producing more examples. Each one is only a historical
representation of this complexity displayed as an elegant design.

They would not produce something better described, however. All that
might happen is that I may short-circuit the learning which comes only
from investigation and finally proof as the waves develop. Then it burns
in a particular lesson.

The rules are very simple - I will say that one should abandon any of
the former parts which the NEWR negates because that confusion will
certainly not get you to your goal quicker.

The rules of physics which govern crystallization will not be anything
but a guide as one watches a snowflake form. Fortunately EW is much
simpler ( as far as we know - money is not involved so perhaps more
info would have been studied on flakes if it were ).

Funny - my suggestion had nothing to do with the latest 4th wave. I just thought it would be interesting to see, if the new rule could explain why certain patterns are such high probability trades. Like ending diagonals, which tend to be completely retraced. That's all.