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)

Intermediary Observations 4-1

Monowave Groups 4-1 �
Rule of Similarity and Balance 4-3

Price 4-4
Time 4-4

Rounds (I through 3) �&4-5
Zigzag "DETOUR" Test
What's Next? 4-8

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The previous chapter, Preliminary Analysis, provided you with a strong foundation on which to
continue your search for legitimate Elliott patterns. These Elliott patterns will be constructed from
groups you isolated based on rules listed at the end of Chapter 3 (see "Pattern Isolation Procedures," page
3-65). To continue a wave group's qualification process in becoming an Elliott pattern, the Structure
labels of the isolated group must adhere to a rigid sequencing scheme. In addition, certain tests will be
applied (before proceeding to Chapter 5) to make sure all wave segments are of the same Degree.

Monowave Groups

As you already know, monowaves arethe building blocks ofthe Elliott Wave Theory. Unfortunately,
ifstudied individually, monowaves only provide you with a limited perspective on the future course of
a market. A greater understanding ofmarket possibilities can be derived by grouping monowaves which
exhibit specific Structure label sequencing (which the word polywave was coined to describe). This
specific sequencing is guided by the Position Indicators preceding each Structure label.

Justlike monowaves,polywavescan eitherbeCorrective orImpulsiveinnature. It takes atleastthree
monowaves to create a Corrective polywave. At least five monowaves are needed to create an Impulsive
polywave. At the top ofthe next page, Figure 4-1 illustrates an idealized Corrective pattern while Figure
4-2 depicts an idealized Impulsive pattern. As can be ascertained from a study of Figures 4-1 & 4-2,
Impulsive patterns occur when a market is gaining or losing ground (similar to Directional action, see
Chapter 3) while Corrective patterns usually travel sideward (similar to Non-Directional action).

IntermediaryObservations 4-1

Figure4-1 Th ree monowaves WithsingularStructure "lists"inhabitingthe end of numerousmonowavesonyour chart, locate those
Polywave combined in theproper wave groups created during the "Pattern Isolation Procedures" at the end of Chapter 3. Of the groups
fCaoshrrioecntivcerepaotelywonaeve(.1) isolated,always choose among those which contain only three or five monowaves,those three or five
Figure4-2 Five monowaves com­ adjacent monowaves may form a Standard Elliott polywave pattern (as you gain experience,some or all
Polywave bined in the proper of the three or five segments chosen could be compacted wave groups). IMPORTANT: Of those wave
fashion create one (l) groupings chosen, work first on the group which consumes the least overall price and time.
Impulsivepolywave.
The deciding factor in creating a polywave is the presence of a Structure Series found among the
Figure4-3 isolated string of monowaves. A Structure Series is an organized listing ofproperly Positioned Structure
labels which combine to form an Elliott pattern (see top of Figure 4-3 on previous page). Through the
Standard Patterns (for all students) process of Compaction, Structure Series' will allow you to amalgamate many simple Elliott Wave
A. :5-:F3-:?5-:F3-:LS Impulsion (trending nature, refer topage 5-2} patterns into more complex patterns in a logical,natural fashion.
B. :5-:F3-:?51 Zigzag (correctivenature,refer topage5-19)
C. :F3�:c3-:?51 Flat(corrective nature, refer to page5-17) Figure 4-3 illustrates the Position Indicator sequencing and the exact number of ":3's" and ":S's"
D. :F3-:c3-:c3-:?3-:?31 Triangle(corrective nature,refer topage 5�23) which must be present to create a Standard or Non-Standard Elliott pattern. If some of the waves you
E. :F3-:c3-:c3�:?3.:L3 Terminal(conclusivenature,refertopage 5-2) are dealing with are compacted and only possess their base Structure label, the compacted pattern's base
1lf the last Structure label of aStandard CorrectiveSeries does notcontainan "L" Position Indicaror, the Series Structure can represent any legal Positioned Structure label of the same Class (for a definition of "Class"
willneed to be Compacted toa ":3" andmadepartofoneoftile Non,Standard PatternslisWllbelow refer to page 2-4). Any pattern above monowave development must conform to one of the four Standard
Structure Series'or oneof the various varieties of Non-Standard Series'. [Notice, in the last sentence only
Non-Standard Patterns (foradvancedstudents) fQJJr.Structure Series'were mentioned. F.h!.f.Standard Structure Series' are listedin Figure 4-3 , but only
F. :Y++x:c3(sniiiller6)++:34 Any 0Doublett Grouping (correcti'l�0cttapter8) four of those Series' are actually unique. The last Standard Series, ":3-:3-:3-:3-:3," is repeated and can
G. :33++x:c3(Iarger7)++:33 Double Thre e Running(corrective,seeChapter 8) be used to create two separate patterns with vastly different implications. Depending on the shape of
H. :32++X!C3(size'l5)++:32++x:c3(size't)++:34 • Any "Triple" Grouping(corrective,see Chapter 8) the waves grouped (and other conditions introduced in Chapter 5), you will be able to decide which of
1Couldbe anyStandardFlat,Zigzag orExpandingTriangle (when the "x:c3" islargerth;!n the two patterns is unfolding.] Figure 4-3 illustrates and names these combinations allowing you to
further define development on your chart. Notice,some Structure labels in Figure 4-3 do not contain
theprevious ":3," aZiguig should notoccurbefore orafter the "x:c3j Position Indicators. When Position Indicators are not present in this official listing, any Position
Indicator "legally" allowed in front of the Structure label in question could be used.
4Could6"bi3ceCca3on"uylmdSubtsaetnabdeSastramdnCadllaoerrrrdtehFciitlliai�tp�orpreTavtirtoieaumns,g"l5:e3T"(hieff•llx'S:tc"3:"3c"oI7su"xlad:Tcbe3ri"almanrguglseet,rimbte:shlsaomrugaleldrlebtrehtaEhn;xp!pnratehnvedipoinurgse)v"i:o3u•s ":3"
When comparing the isolated wave groupings on your chart with those in Figure 4-3, and your
4·2 IntermediaryObservations grouping is composed strictly of monowaves,one of the "Standard Patterns" at the top portion of Figure
4-3 should be appropriate. If you have already Compacted some previous price action and an "x:c3"
occurs anywhere in your isolated wave group,one of the Non-Standard Patterns will take effect.

No matter how large or time consuming, all grouped market action pegged for analysis must match
one of the Structure Series listed inFigure 4-3. Your goalis to find a Structure Series listed which mimics
the one on your chart. Ultimately,the identification of Structure Series' is paramount in your search for
larger,reliable wave patterns. Once a series has been found, many additional tests (some covered
immediately after this section and some covered in Chapters 5-12) must be conducted to elevate your
monowave group to polywave status.

Rule ofSimilarity & Balance

Once an acceptable Structure Series has been identified,the Rule ofSimilarity & Balance must be
considered. All Elliott patterns depend on combining like with like. Waves that are not "similar" cannot
be combined to complete a larger Elliott formation.

Market action develops under two general categories - price and time. For two adjacent waves to be
"similar" the relationship between the two waves should fall into a specific relational range based on
price or based on time or a combination of the two. Similarities of price and time can simultaneously
occur between adjacent waves but are not necessary to pass inspection under this Rule.

IntermediaryObservations 4-3