Mastering Elliot Wave Presenting the Neely Method The First Scientific, Objective Approach to Market Forecasting with the Elliott Wave Theory by Glenn Neely, Eric Hall (z-lib.org)

Figure9-S Independent Rule

(3) The Independent Rule applies to all other Rules of the Theory that already have been and will be
presented in this book. All Elliott Rules and guidelines (and the Neely Extensions) should be applied
Incorrect as separate entities to every wave pattern deciphered (as long as there is enough detailed price action to
apply them). In other words, do not get in the habit of thinking certain characteristics always go hand­
All these moves take the same in-hand. Example: Most Elliotticians believe Extensions and Subdivisions are synonymous. Usually,
amount oftime. This virtually guar­ the two concepts are present in the same pattern at the same time, but not always. Each Rule, that of
antees the third advance is only Will Extensions and Subdivisions, should be considered independently. If they are simultaneously present
of a much bigger advance. in the same move, fine. If they are not, the validity of the proposed count is not in jeopardy.

GoodP�ibility (3) Simultaneous Occurrence
(v)
This interpretation eliminates the prob­ (iii) / This Rule was needed to solidify all the other rules presented in this book. To define Simultaneous
lem of three same degree waves occurring Occurrence, all Elliott rules applicable to a particular situation have to be "simultaneously" present in
one after the next with all of them taking /\ I order to create a reliable interpretation. To apply this rule, begin with the rules and techniques described
the same amount of time. The third seg­ /V inPreliminary Analysis, continue to through the Intermediary Observations, Central C onsidera­
ment (wave-I) is a lower degree pattern, tions, etc. If any Rule normally associated with the pattern on your chart does not manifest, it is likely
so now only two adjacent waves are equal / (iv) some other formation is developing. The count which meets all or most of the applicable parameters
in time, which is how it should be. should be considered the best interpretation. Do not forget, even post-pattern behavior is part of the
(i) / investigative process needed to find the foremost choice.

C Exception Rule

Also Incorrect ASPECT 1
Occasionally, at important market turning points or under "unusual" conditions, one of the Rules
For the same reasons as those mentioned in which is usually critical to proper pattern construction may not apply orbe followed. An important Rule
thetopdiagram, this action cannotbe the the would be any found from Chapter 3 up to (but not including) the "Breaking Point" section under
a-b-c of a Zigzag since all waves (of the Impulsions or Corrections in Chapter 5. Situations which substantiate "unusual" conditions are:
same degree) are of the same time duration. A. The end of a Multiwave or larger pattern.
B. The 5th wave or C-wave of a Terminal (diagonal triangle) pattern.
C C. A move which i£ or� with a Contracting or Expanding Triangle.
IfIIIIIIIII Not mentioned until now, Triangles and Terminal patterns are the exception to virtually all Rules,
"b AlsoP�ible situations and conditions (i.e. time, price, channeling, Progress Labels, Fibonacci relationships, etc.).
'' Whenever an important Rule gets broken, it is likely that a Triangle or a Terminal pattern had something
Correctly interpreted, the mar­ to do with it.
ket couldbe forming a Running If a major Rule is not represented in the market action being observed, the interpretation might still
Correction (left) ormay besub­ be acceptable as long asthere is substantiationfor thefailureof the Rule. Substantiationmightcome from
dividing for wave-c (right), one of the conditions above (A, B, or C). The extreme importance of the Rules discussed up to the

C "BreakingPoint" headings in Chapter 5 precludes the possibility that two important Rules be broken si­

B multaneously. If more than one important Rule is "broken" the count should be eliminated.

9-S Basic Neely Extensions Basic NeelyExtensions 9-7

ASPECT2 result in an incorrect interpretation.
Under the Wave Principle, extreme confidence in a change of price direction is only possible as the
Another aspect of the Exception Rule states:
"Thefailure of a Rule occurs for a specific reason; this reason usually creates another Rule." market terminates the last wave segment. The only way to stay on track between one important
termination point and the next is to do the following:
Below are two examples of how this happens:
1. The 2-4 trend.line of an Impulse wave should� be broken by any part of wave-3 and a. Mark the termination point of every single monowave on your chart with a dot
hardly ever by any part of wave-5. If the 2-4 trendline is broken by part of wave-5, this activates
a Rule which says "the market must be forming a Terminal Impulse pattern." A Terminal (this step can be eliminated as you become more experienced).
pattern is a legitimate reason for the break of a true 2-4 trendline. b. Study the Retracement Rules and then using the Pre-Constructive Rules of Logic, carefully
2. When the "thrust" out of a Triangle does not stop advancing or declining when the time zone
occupied by the apex point of the Triangle is reached, then the market is forming a Terminal place the appropriate Structure Label(s) at each turning point.
pattern or the previous Triangle was of the Non-Limiting type. c. Look for group Structure combinations among adjacent monowaves which adhere to

Necessity ofMaintaining "Structure" Integrity acceptable (Standard or Non-Standard) Elliott Series'.
d. Once a Series is identified, move to the appropriate section
stn. cSttartutecnt�nroenitsothdeetca�ilt,icaanldcoadnhsiedreernactieotnoipnapsut twtianvgetoSgteruthcetur rae", PcraongyroesuseLxapbeeclt"tsocaecncauriroa.teOlynliynttehrrporuegt ha
market with any consistency. With larger patterns, analysis can become more difficult, unless proper (Impulsions or Corrections) of Chapter 5.
�3:�has been taken to dissecteach subsegment and classifyit as Corrective orImpulsive (:3 or :5). Even e. Proceed through all the Essential Rules which apply to that general formation category.
�f 1t 1s currently not clear which pattern a market isforming, adherence to past,provable price "structure" f. Place Progress Labels on the wave pattern and continue through the "Conditional
1osb�viaonuds.atTolh")'i..s Eventually, the Elliott pattern which has been under formation all along will become
usually occurs as the pattern approaches a conclusion. Rules" section.
g. Check all the applicable Rules and guidelines (under Advanced Progress Label Application &
Locking in Structure
the Advanced Rules of Logic) to confirm all minor details and subtleties of wave behavior
After having identified a reliable Elliott pattern, and then proceeding through the process of are present (Alternation, Fibonacci relationships, etc.). If it passes those tests, go to the next step.
Compaction, it is very important the simplifiedStructure of the move(beingjust a :3 or :5)is not changed h. Compact the pattern to its base structure, ":3" or ":5" (see Compaction, Chapter 7).
at some later date. This would be a drastic mistake. Generally, you should never change the Structure i. If you are working strictly with monowaves, raise the Complexity Level of the Compacted
of a properly Compacted pattern. Often, you might be temptedto do so in order to create an interpretation pattern to Level-I (underline the :5 or :3). If you have developed beyond the monowave stage,
you would like to believe is unfolding, but as a Rule, never do it. raise the Complexity of the Structure Label to the appropriate level based on the techniques
discussed in the "Complexity" section of Chapter 7.
Contrary to what appears a common belief among Elliotticians and especially the general public, the j. After Compaction and Complexity designation, the process begins over again. Return
Structure of a formation cannot be legitimately changed at the whim of the analyst to suit current opinion, to step-b to confirm if the newly compacted pattern effects or changes any potential
market fundamentals, technical indicators, etc. Wave patterns develop based on the net result of all the Structure Labels for the monowaves (or higher) surrounding the compacted pattern.*
buy and sell orders reaching the floor of an exchange. Those buy and sell orders are sent to the floor by Then move on to step-c, etc. Continue returning to step-b until you have numerous
traders around the country who are analyzing Fundamentals, Technicals, Astrological aspects, Volume, compacted patterns each marked with a� Structure Label. These single Structure
Open Interest, Bullish Sentiment, etc. Since a market cannot move unless there is someone bidding to Labels will eventually form identical Series just as the monowave groups once did. The
buy or someone asking to sell (all other events notwithstanding), when the two come together it creates only difference, each Structure Series will be representing a polywave (or higher) instead
an"official" supply/demandprice level. As a result, there is nodisputingthatpriceaction is the net result of a monowave. All the Rules discussed up until now, and throughout the book, will work
of all external market influences.and therefore is the best indicator of futurem- arket performance. for these more complex patterns in the same fashion as they did for the simple formations
(except where noted). Work with the compacted Series' just as if they were monowave
The level at which a market trades does not occur by chance. Thetrade takesplace because itsatisfies Structure Labels. Look for Series combinations, apply the "Rule of Similarity...", etc. The
both sides of the equation, the buyer and the seller. Waves are the by-product of these transactions only additional step necessary in working with the more complex patterns is to check for and
connected end-to-end showing a continuous chain of events. Transforming the structure of a pattern to follow the Rules under the "Construction of Complex Polywaves, Multiwaves etc."
fit what you feel is going onor because you are confused about the market's position is aYm.J2QQrreason The compacted Str,11pture Labels should be placedgn your charts which covera period of time longer
to alter the previously established "Structure" of a count. Changing previous wave "structure" to make than the original monowave chart. On your longer-term chart, only mark the sini:le Structure of each
thecountfinish the way you "believe" itshouldor to get the pattern tocomplete sooner will almost always compacted polywave, do not bother with each individual monowave's Structure.
The Wave Theory is a relative phenomenon. It does not matter how complex or simple a pattern is;
9-8 Basic Neely Extensions what matters is whether the pattern is Corrective or Impulsive in nature. That will tell you how to handle,
combine, interpret and trade market action.

*This is describing the process ofReassessment which is covered in greater detail at the top of page 7-3 in Chapter 7.

Basic Neely Extensions 9-9