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NeoWave. Part 20. Application of progress labels to terminal impulses

May 21, 2020

May 21, 2020

NeoWave. Part 20. Application of progress labels to terminal impulsesMikhail Hypov

Further description of progress labels and their application to

impulse waves. Progress labels in terminal impulses

Dear friends!

In the [previous article][1], I described the application of progress labels to trending impulses. This article will deal with the progress labels applied to terminal impulses. I will also explain how to define the wave ratios in the sequences. If you are not familiar with the NeoWave theory, I recommend you to read all the articles in the NeoWave series based on Glenn Neely’s book Mastering Elliott Waves.

A full list is given below:

[Neo Wave theory. Part 1. Rules for creating charts][2].

[Neo Wave theory. Part 2. Basic information on Polywaves and Structure Labels. ][3]

[NeoWave. Part 3. Retracement Rule 1.][4]

[NeoWave theory. Part 4. Retracement Rule 2.][5]

[NeoWave theory. Part 5. Retracement Rule 3.][6]

[NeoWave. Part 6. Retracement rule 4. Conditions “a” and “b”][7].

[NeoWave. Part 7. Retracement rule 4. Conditions “c”, “d” and “e”][8].

[NeoWave. Part 8. Retracement rule 5. Conditions “a” and “b”][9].

[NeoWave. Part 9. Retracement rule 5. Retracement rule 6, condition “a”][10].

[NeoWave. Part 10. Retracement Rule 6. Conditions “b”, “c”, and “d”][11].

[NeoWave. Part 11. Retracement rule 7.][12]

[NeoWave. Part 12. Impulsions and the rules to analyze impulse wave patterns. ][13]

[NeoWave. Part 13. Corrections. Rules to identify a correction.][14]

[NeoWave. Part 14. Triangles. Rules to identify triangles.][15]

[NeoWave. Part 15. Basic and advanced rules of logic to analyze triangles][16].

[NeoWave. Part 16. Extended rules of logic for Flats and Zigzags.][17]

[NeoWave. Part 17.][18][ ][18][Extended rules of logic for complex corrective patterns.][18]

[NeoWave. Part 18. Rules of complexity and balance. Compaction procedures. Power ratings.][19]

[NeoWave. Part 19. Progress labels applied in trending impulses][1].

Progress labels in terminal impulses

Terminal impulses (terminals) in the Elliott Wave theory are also referred to as diagonal triangles. Remember, I have already covered diagonal triangles in the article devoted to the Market Wave Theory by Robert Prechter [here][20]. Robert Prechter referred diagonal triangles to corrective patterns. However, terminal patterns and horizontal triangles are composed of the same structure series (series of structure labels) and feature similar behavior.

Progress labels for a terminal with wave 1 extended

An extended wave 1 occurs in a terminal impulse much more often than an extended wave 3 or 5. It features the following post-effects:

  1. Wave 2 should not retrace more than 61.8% of wave 1. In this case, wave 2 is often greater than wave 4 in price and time and has a more complex structure.
  2. Wave 3 is between 38.2% and 61.8% of the extended wave 1.
  3. Wave 5cannot be more than 99% of wave 3, but will more likely be only 61.8% to 38.2%.
  4. Wave-4 will usually be 61.8% of wave 2 in price and __equal or relate by 61.8% in time.
  5. The 2-4 trendline should be clear and easy to identify (the price action is clear). The only way the 2-4 trendline can experience a ‘false break’ (under these circumstances) is if the 5th wave is an Elongated Flat, a correction experiencing a C-Failure or a Horizontal Triangle or a c-wave Terminal within the 5th wave.

Progress labels for a non-extended wave 1 in the terminal

When the first wave is not extended, the terminal pattern will most likely be the c-wave of a correction, excluding the C-wave of a triangle. However, the terminal can’t be the fifth wave of an impulse pattern. Wave 2 can retrace as much as 99% of wave 1.

Let us study a terminal impulse on an example:

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][21]

It is clear from the chart [BTCUSD][22] above chart that waves 2 and 4 share some of the same price territory, so, this is a terminal. The first wave is extended in this sequence. According to the first rule explained above, wave 2 should not retrace more than 61.8% of wave 1.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][23]

The second rule states that the third wave should be between 38.2% and 61.8% of the extended first wave. It is clear from the chart that this condition is also met.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][24]

It is clear from the chart that the third condition is also met, and the fifth wave is less than 99% of the third wave.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][25]

The fourth wave is a little less than 100% of wave 2. Therefore, the fourth rule “about the relation of 61.8%” is not. However, this rule may not be strictly observed, so slight deviations are accepted.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][26]

It is also clear from the above chart, that wave 4 takes almost the same time that it took to form wave 2 (in this case, a slight deviation is accepted). So, as the rest of the rules are met, the fourth condition can be considered to be fulfilled.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][27]

It is clear from the above chart that the 2-4 trendline (the pink line in the chart) is clear, without false breakouts. So, the final, fifth, rule is also met. Most post-effects of the extended first rule are met and work in practice. In the case of the practical application of these conditions, if there is supposed a terminal with an extended first wave, we can use the data of the five post-effects to set the targets. To make sure of their efficiency, I suggest you study them on the example of any terminal with the extended first wave that you find one the price chart of [Bitcoin][22] or any other t[rading instrument][28]. The functions of the [LiteForex][22] browser terminal are enough to carry out a thorough technical analysis.

Progress labels for the extended wave 3 in a terminal impulse

An extended wave 3 is extremely rare in a terminal impulse. If you witness one, there are the following post-effects:

  1. Wave 3 cannot be much longer than the first wave.
  2. Wave 2 must retrace more __than 61.8% of the first wave and the fourth wave should retrace 38.2% (preferably less) of the third wave.
  3. A 1-5 trendline should be broken by the third wave.
  4. The fifth wave should not be more than 61.8% of wave 3.
  5. Terminals with the extended third wave usually occur as the C-wave of a larger pattern, but they are never the fifth wave of an impulse pattern.

The five post-effects described above are quite simple to use. To see that they work, I suggest you study them on your own using any terminal impulse with the extended third wave.

Progress labels for a non-extended wave 3 in a terminal

If the third wave in a terminal is not extended, then:

  1. If the first wave extended, wave-3 should not be much more than 61.8% of the first wave and wave 5 should not be much more than 61.8% of wave 3.
  2. If wave 1 is at least 61.8% but less than 100% of wave3, the 5th wave will probably extend. In this case, wave 4 will overlap wave 1, wave 4 will be larger in price and/or time than wave 2. The5th wave should be at least equal to the wave group 1-3 in price added to the low of wave 4. The 5th wave should not be more than 161.8% of waves 1-3 added to the top of wave 3

Let us study the third wave in a terminal impulse on an example:

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][29]

In this pattern, the extension is the first wave, so we shall check the relation of waves 1 and 3. It is clear from the chart that the third wave is less than 61.8% of the extended first wave.![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][30]

The fifth wave is between 61.8% and 100% of wave 3. I can say that the first rule is not fully met in this pattern. However, if we entered a bull trade/a long and set a target little higher than 61.8% level, we would make almost a maximum profit possible for the price action of the fifth wave.

Progress labels for the fourth wave in a terminal impulse

  1. Wave 4 cannot retrace more than 61.8% of wave 3unless the fifth wave is extended, and even then, it is extremely rare.

  2. If it assumed that the fifth wave extends, wave 4 will probably take more time and price than wave 2. Besides, wave 2 will consist of more subdivisions than wave 2. Wave-2and 4 are likely to relate by 61.8% in price and/or time.

Let study the fourth wave in a terminal on an example:

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][31]

In the [BTCUSD][22] chart, there is a terminal impulse, whose fourth wave retraces 61.8% of wave 3, which corresponds to the above post- effect.

As only one wave can be extended in a pattern, and it is the first wave in our case, the fifth wave can’t be an extension here. So, the second requirement is not met in our case. However, to check this condition in practice, you can find a terminal impulse with an extended wave 5 on the [Bitcoin][22] chart on your own. Most commonly, this rule will work.

Progress labels for an extended fifth wave in a terminal impulse:

If the fifth wave is extended in a terminal, then:

  1. It can occur if the terminal is the fifth wave, which is also extended, of a larger impulse pattern. Or the terminal could be the C-wave of any correction, except a horizontal triangle.
  2. The 5th wave of the 5th Extension Terminal pattern should be at least 100% of waves 1-3, and the third wave should not be more than 161.8% of wave 1.
  3. Wave 4should retrace at least half but less than 99% of wave 3.

Progress labels for a non-extended wave 5 in a terminal

The terminal impulse with a non-extended wave 5 features the following characteristics:

  1. If the fifth wave is not extended it should not be more than 61.8% of wave 3. It should not be of the highest complexity of the three impulse waves.
  2. The 5th wave should break beyond the trendline drawn
  3. across waves 1-3.
  4. The 2-4 trendline should not be broken until the fifth wave finishes if wave 5 is not a triangle.
  5. Wave 4 should consume less time and price than wave 2.

Let us study the fifth wave in a terminal impulse:

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][32]

We go back to the terminal impulse in the [BTCUSD][22] chart above. As I earlier, the first wave is clearly extended in this pattern So, we should apply the progress labels corresponding to the non-extended fifth wave. We shall start with the first rule. It is clear from the above chart, the fifth wave is 61.8% of wave 3. This situation doesn’t meet the first requirement. However, Glenn Neely accepts rare exceptions to this rule is the terminal impulse is composed of monowaves.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][33]

In the above chart, we check two post-effects typical for the non- extended fifth wave in a terminal. We draw two trendlines. The 1-3 trendline is purple. The 2-4 trendline is blue.

In our case, the fifth wave doesn’t break through the purple trendline, but it almost touches it. It can be explained by the strength of the bearish trend, which has prevented the terminal impulse form turning into a strong trending impulse. Nonetheless, a touchpoint also confirms the progress label if rule 3 is observed. It is clear from the above chart that the 2-4 trendline (blue) is not broken until the fifth wave completes.

In this situation, the blue trend line is likely to be broken by the next wave after wave 5 completes, which is present in the chart.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][34]

And finally, let us check if the fifth wave meets rule 4. It is clear from the chart that wave 4 is less than wave 2, and so, the first part of the rule is observed.

![LiteForex: NeoWave. Part 20. Application of progress labels to terminal impulses][35]

However, wave 4 takes a little more time to form than wave 2, which doesn’t meet the requirements for progress labels of a non-extended wave 5 in a terminal. Glenn Neely, the developer of the NeoWave theory, accepts this small deviation in a sequence composed of monowaves. However, wave 4 can’t be much greater than wave 2.

Here, I am about to end explaining progress labels applied to terminal impulses.

In the following articles, I will deal with such important technical tools under the NeoWave as channeling in impulse patterns and Fibonacci ratios in impulsions. I also describe some rare extraordinary patterns that Neely discovered after the had written his book Mastering Elliott Waves.

Colleagues, I strongly recommend practicing this theory in real trading to obtain a deeper insight. I, for example, test and check all the trading systems in the demo and real account with [LiteForex][28] and share the information with you in the trader [blog][36]. I have been working with LiteForex for many years already, and I have always been satisfied! If you don’t yet have a trading account, go ahead and join successful traders!  [LiteForex][28] launches a [draw of cool prizes][37] for all participants with the total prize fund of 350 000 USD! Who of us will win a dream house?:)

I wish you good luck and good profits!

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker [here][38]. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][39] your trading account.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

Price chart of BTCUSD in real time mode

![NeoWave. Part 20. Application of progress labels to terminal impulses][40]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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