Practical application of the NeoWave theory by Glenn Neely.

June 16, 2020

NeoWave theory by Glenn Neely. Practical application.Mikhail Hypov

Trading plan based on the NeoWave theory by Glenn Neely. Wave

analysis. Pattern identification. Entering a trade at the third wave and take the profit.

Dear Friends!

In the previous lessons, I covered the theoretical aspects of the NeoWave theory. Now, I want to show its practical application to real trading. I will demonstrate all the peculiarities of the NeoWave trading system used in cryptocurrency trading. If you aren’t yet familiar with the NeoWave theory, I recommend covering all the articles, starting from the first one, in the NeoWave series based on Glenn Neely’s studies:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[NeoWave. Part 21. Channeling in impulses and Fibonacci relationships.][21]

[NeoWave. Part 22. Progress labels in flat corrections][22].

[NeoWave. Part 23. Progress labels in triangles.][23]

[NeoWave. Part 24. Progress labels in triangles and zigzags.][24]

[NeoWave. Part 25. Fibonacci relations and correction identification with channeling][25].

[NeoWave. Part 26. Missing Waves and Emulations][26].

Trading plan

The NeoWave Trading system suggests analyzing the market situation according to the following plan:

1. Analysis of monowaves (in some cases this step can be omitted if it is a brief analysis of patterns of higher degree, or if the Elliott pattern is obvious):

Analysis of monowaves according to the rules of retracement;
Making structure lists;
Identification of patterns and choosing relevant structure labels;
Placing structure labels;

2. Analysis of patterns based on the main rules of impulsions.

3. Analysis based on the rules of logic, equality, alternation (it is not always possible to carry out at the stage of the pattern formation).

4. Application of progress labels.

5. Channeling and the prediction of patterns’ development using Fibonacci relationships.

Well, let me show you how the NeoWave trading strategy works on an example.

Analysis of monowaves

To understand the market situation, we need to analyze monowaves preceding the current monowave and after that combine them into Elliott patterns. To analyze monowaves, we shall apply the Retracement rules that I covered in the following parts:

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

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

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

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

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

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

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

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

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

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][27]

First, we need to select the earliest monowave among those we are going to analyze. The red zone in the chart marks the first monowave that we will analyze, and the blue area marks the last complete monowave. I also assigned a number to each wave of the studied interval. There 7 waves in total.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][28]

We shall mark the first wave that we will analyze as m1, the next wave on the right is m2. Next, we shall calculate the relations between m2 and m1. To find the ratios quickly, I will use Fibonacci retracements. To find out the retracement rule relevant in the current market situation, we shall use the table of rules presented in [Part 3][3].

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][29]

In our example, m2 will be 61.8% of m1. Therefore, according to the rule table, we shall apply the third retracement rule.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][30]

As m0 is between 61.8% of 100% of m1, so, condition (с) of rule 3 is applied to our case (I covered this rule in detail [here][5]).

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][31]

It is clear that m3 is shorter than m1, it is completely retraced during a longer period of time than it took to form. So, according to paragraph 5 of rule 3 ©, m1 is likely to be the a-wave or the c-wave of a zigzag that is an element of a more complex correction. We place “:F3/(:s5)” at the end of m1. However, as m5 (plus one time unit) is completely retraced by m4 faster than m4 took to form, we will remove “(:s5)” from the structure list.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][32]

In the same way, I analyzed monowaves 2, 3, 4, 5, 6 and 7, labeling each wave with m(-2), m(-1), m(0), m(1), m(2), and identifying then the relevant rule and condition. Next, I put the relevant structure labels, according to the rules. I won’t again describe this process in detail, as it is similar for each wave, besides, I described the example for each rule (see the links to the retracement rules above).

As a result, I have the following structure lists:

1. Rule 3 (с), paragraph 5 “:F3”.

2. Rule 2 (e), paragraph 1 “:5”.

3. Rule 4 (d), categories i and ii, paragraph 5 “:F3/:c3”.

According to paragraph 5 of the (d) condition of rule 4, the most likely structure label is “:F3”. Therefore, we shall put brackets around “:c3” as less likely.

4. Rule 6 (d), no paragraph is met.

5. Rule 1 (b), paragraph 1 - “:s5”.

6. Rule 1 (b), paragraph 1 - “x:c3?” (this structure label I discovered in the analysis of wave 6).

Rule 7 (d), paragraph 4 - “:c3”.

7. Rule 5, condition (a), no paragraph is met.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][33]

As the current results do not suggest anything (we haven’t identified a few structure labels, and the present sequence doesn’t look like any known Elliott pattern), we shall combine waves 3, 4, 5, 6, and 7 into a single conditional wave.

In this case, we have a three-wave pattern which would meet the following requirements:

Rule 2, condition (d), paragraph 1 - “:5”.
Rule 5, condition ©, paragraph 7 - “:F3”.
Rule 2, condition ©, paragraph 2 - “(:5/:s5)”.

Now, the sequence of structure labels is more clear. This sequence looks, at first glance, looks like a zigzag. Due to a particular structure sequence “:5 – :F3 – :5”, we can be sure that this is a zigzag (you learn more about how to identify wave patterns using structure labels [here][18]).

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][34]

As you know from the previous training articles, a zigzag may be followed by the linking wave X in a complex pattern. In the case of a simple pattern, a zigzag is followed by the first wave of an impulse. As the third wave is labeled as “:5/:s5”, it means that there could be a should (X) wave with the continuation of the correction, or a new impulse (I wrote about structure labels in detail [here][2]). As a rule, the (X) wave is the shortest in the sequence. However, it is clear from the above chart that this condition is not met. So, there is likely to be developing a new impulse, namely, its first wave. To clarify the type of the new impulsive formation, we need more data.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][35]

When there appears a new local high, we can assume wave (2) is about to complete. We shall draw the base channel line across the zero level and end of wave (2).

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][36]

The further situation suggests that the local low is not the end of wave (2), it is just wave (A) of the first flat. Besides, the entire second wave is a double flat. So, according to the principles described in [part 21][21]. we shall move the baseline to the actual endpoint of wave (2), which coincides with the end of the second zigzag in the double flat. How do we understand that the second zigzag has ended? This becomes clear based on the last wave, the highest point that has exceeded the high of wave (B).

Entry rules

Ahead of the third wave, it is time to enter the first trade. So, I will write about the entry rules that we should observe when opening a buy trade:

If you are going to enter a long trade, I recommend you to follow the following rules:

The downtrend turns up.
A buy entry is put at the bar close if the close price is higher than the opening price.
A buy entry is put if the current close is higher than the previous close.

Likewise, I recommend entering a short trade is the following conditions are met:

The uptrend turns down.
A sell entry is put at the bar close if the close price is lower than the opening price.
A sell entry is put if the current close is lower than the previous one.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][37]

In our example, the bar marked with the blue oval meets all the requirements for a long trade:

The downtrend turns up.
The close price is higher than the open.
The current close is higher than the previous close.

Besides, as I have already mentioned, the second zigzag ends, and so, the correction is more likely to complete. This suggests that there should start a new impulse in the position of the third wave. Therefore, once the bar marked above closes, we shall enter a buy trade.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][38]

A stop loss is set at the zero level of the large impulse, this level is marked with the red line in the chart.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][39]

When the presumed third wave breaks through the level where the first wave ends (the yellow line in the chart), we should be more confident that this is the third wave. Now, we can enter another long, as the price must continue rising.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][40]

At this moment we need to set the target. Note that wave (1) has a rather complex structure. Besides, the following flat correction signals that the uptrend is strong. Therefore, we can assume that the first wave is an extension. If so, according to the Fibonacci relations described in [part 21][21], wave (3) should not exceed 61.8% of wave (1). I marked the zone where wave (3) can be developing by the green area in the chart. The upper border of the zone will be the level for a take profit.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][41]

In fact, the third wave should end exactly at the level of 61.8%. When this level is reached, and there starts a new bear trend, we should close the long trades we entered earlier. Besides, you should take into account that the 61.8% level is the limit. If you notice the trend reversing before the third wave reaches the 61.8% level, you should exit the trade earlier, without waiting until the price reaches the target zone.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][42]

structure lists in [part 18][18]):

structure lists in [part 18][18]):

structure lists in [part 18][18]):

structure lists in [part 18][18]):

structure lists in [part 18][18]):

structure lists in [part 18][18]):

structure lists in [part 18][18]):

8]):

:5 – :F3 – :?5 – :F3 – :L5.

Therefore, we have another indirect evidence that the assumption about the formation of an impulse pattern is correct. Besides, this is likely to be a trending impulse. This assumption can be confirmed only when wave (4) completes.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][43]

The above chart displays wave (4) of the impulse unfolding. It is not usually recommended to enter a short trade at the fourth wave amid the high volatility and unpredictability of the price behaviour. However, if you still want to enter a short, you could do it after the second consecutive down bar closes (it is marked with the blue oval on the above chart). A stop-loss, in this case, is set above the peal of the third wave, and the target profit is identified using the Fibonacci relationships, or you can set a take profit around the basic line of the channel.

However, in our case, the down move is going to be small. This is signalled by two signs. As you see from the chart, the second wave is rather time-consuming and has a complex structure. This corresponds to the progress labels rules described in [part 19][19]. So, according to the alternation rule, which I covered in detail in [part 12][12], the fourth wave should have a simpler structure than the second on, and it is likely to be shorter. The rules of progress labels also mean that the fourth wave of the impulse should have an extended first wave, is also likely to be equal or shorter than wave (2).

Besides, according to the Fibonacci relations described in [part 21][21], if the second wave is the largest among the corrective waves (wave (2) is likely to be the longest), wave (4) should be 38.2% or 61.8% of wave (2). In rare instances, wave (4) could be 100% of wave (2). On the chart, the presumed levels of 61.8% and 100% are marked with the green and grey zones (if we entered a trade, the target profit would be at the level of 61.8%). Therefore, in our case, the target profit for a short trade should be set at these levels. However, the short entry, already not being perfect, is worsened by the fact that the second bar in fact has reached the first target at 0.618. So, the profit/risk ratio is less than 1 if the target is at 100% and the stop is above the peak of the third wave. In this situation, it is not relevant to enter a short trade.

Here, I need to note that Fibonacci relationships are not mandatory. However, in addition to the rule of alternation, which also indirectly suggests that wave (4) should be small, it provides quite a strong signal.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][44]

As you see, wave (4) is likely to have ended at the level of 100% of wave (2). This pivot point is likely to be the final one (or the low of wave (4) as 100% could hardly be exceeded). I have corrected the channel baseline on the chart, drawing it across the end of wave (4). I have also drawn the upper channel line across the endpoints of waves (1) and (3). I covered channelling techniques applied to an impulsion with the extended first wave in [part 21][21].

By the way, at the stage of an impulsion’s formation, we can analyze the second wave to check if it meets the retracement rules. Unfortunately, it does not meet any of the conditions of rule 6 (this is the relevant retracement rule as wave (3) falls between 161.85 and 261.8% of wave (2)). However, we earlier found out that the second wave is a double flat, and so, it is a three. As it is the first segment of the sequence, the structure labels is “:F3” or the first three.

Therefore, there is the following sequence of structure labels:

:5 – :F3 – ? – ? – ?

Remember, a trending impulse has the following structure:

:5 – :F3 – ?5 – :F3 – :L5

Therefore, the current structure labels confirm the assumption that there is forming a trending impulse.

Now, let us move on and analyze wave (5). We already know that wave (3) is 61.8% of wave (1). According to the basic rule of the impulse construction that should be observed in all cases of impulsions, the third wave cannot be the shortest. So, wave (5) should not exceed 100% of wave (3). This is also stated by the progress labels rules that are covered in [part 19][19]. According to the rules of progress labels applied to trend impulses, the fifth wave of an impulse is likely to be the shortest in the sequence.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][45]

In the above chart, the zone of a possible move of wave (5) is highlighted with the yellow area (38.2% is the Fibonacci relation that may or may not be observed) and the grey area, which marks 100% of wave (3). Besides, We should also note the upper border of the channel. The fifth wave of course may break it, but taking into account that it is expected to be short, it will hardly thrust far out of the triangle. Therefore, the most likely zone and the target profit level will be the blue oval area in the chart.

In general, an optimal entry point for a long is the moment when the second upward bar closes. This section is highlighted with the pink oval as an example in the above chart. As for a stop loss level, it will be relevant to place it around the endpoint of wave (4). The take profit for wave (5), according to the trading system, will be the upper border of the channel.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][46]

At the point, marked with the blue oval, we assume the endpoint of wave (5). Let us study the signals. The fifth wave has exceeded the level of 38.2%, and the bullish momentum is quite strong, so wave (5) should not end at this level. Next, wave (5) breaks through the upper channel border. At this point, a soon conclusion of the fifth wave is already obvious.

Note that the monowave roughly outlined exceeded the channel border, but bars didn’t. If we analyzed this sequence based on the systems by Williams and Prechter, we would surely say that the up move has stopped at the upper channel border.

After the channel is broken, there starts the sideways move, which is the further evidence that wave (5) ends. So, we should exit the trade at this point, as the price will hardly go higher.

following sequence of the structure labels:

following sequence of the structure labels:

following sequence of the structure labels:

following sequence of the structure labels:

following sequence of the structure labels:

g sequence of the structure labels:

:5 – :F3 – :5 – ? – ?

It corresponds to the structure labels of a trending impulse:

:5 – :F3 – ?5 – :F3 – :L5.

Therefore, the chance that the current interpretation of the market situation is correct increases. According to the Elliott wave theory, after an impulsive pattern completes, there should start a correction.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][47]

A sell position is (blue oval in the chart) is opened after the second bearish bar closes. Here, we do not expect until the second consecutive down bar closes, as the strong down move, and the signals described above mean that the correction is almost 100% likely to start. A stop loss is set at the level where the fifth wave of the impulse ends (red horizontal line).

According to the rules progress labels, if wave (5) is not extended, the following correction should retrace it more than 100%. So, the first target will be at the level of 100% of wave (5) (the lower border of the grey zone in the chart).

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][48]

While the corrective pattern is unfolding it is clear that the price very quickly breaks through the level of 100%. Once the level is broken, we should exit the short position in case there forms a strong (B) wave. I do not recommend trading at the (B) wave as it can be both longer and much shorter than the (A) wave. Besides, the (B) wave greatly determines the type of structure forming.

As for the inner retracements, we shall further analyze the structure of waves to obtain a more accurate clue. However, the impulse must be correctly interpreted, as it is clear in our case. We shall analyze the following correction using the basic construction rules and Fibonacci relationships.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][49]

At the stage when there appear two consecutive down bars, we can presume that the (B) wave is about to end. As the correction has a rather simple structure, a short correction is hardly a part of the complex wave (A). The (B) is also likely to be complex.

Considering that the presumed wave (B) is less than 61.8% of wave (A), there is likely to be forming a zigzag. Another signal that the (B) is likely to have ended is the Fibonacci relationship, according to which wave (B) should 38.2% of wave (A). It also indirectly confirms the assumption that there is forming a zigzag and the (B) wave has ended.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][50]

At the second down bar, we enter a short trade (blue oval in the chart). The end of the (B) wave should be a potential pivot point. According to the Fibonacci retracement rules described in [part 25][25], wave © in a zigzag is often 61.8%, or 100%, or 161.8% of wave (B). These relations do not always work, however, they can be used as the reference for the target profits. In the above chart, the zone of 61.8% is green, 100% is grey, 161.8% is red.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][51]

While the © wave is unfolding there emerges a sideways move, at the end of which, there are two consecutive up bars. Besides, this price action emerges at the level of 38.2%. Such short © waves are typical for truncated zigzags. So, I would recommend locking the position at this stage (the zone to enter an opposite trade is marked with the blue oval in the chart).

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][52]

Next, we see that the assumption of a truncated zigzag forming has been wrong. Wave © is likely to end at level 61.8% (there could be small deviations in the Fibonacci levels). When the second consecutive up bar forms (the last for now) we exit the bear position. And we also have a locked position that is marked with the horizontal pink line.

Next, there are the following possible scenarios:

Formation of the X wave that will be followed by another segment of the complex corrective pattern.
Formation of the (D) wave of a triangle.
Formation of an upward Elliott pattern.

All the options allow us to reduce the loss that is now being yielded by the locked position.

Remember, according to the extended rules of logic that you can learn in [part 16][16] when the © wave is shorter than wave (A), the entire zigzag is almost always retraced by the following wave. Otherwise, the following wave is the (X) wave. So, at this stage, while this wave is yet unfolding, we shall presume that it is an (X) wave.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][53]

When the wave following the zigzag is forming, there appear two consecutive down bars. This is an indirect sign of the trend reversal and the end of the wave. However, it is too early to make a conclusion that the wave is finishing. This is because there aren’t any Fibonacci relations concerning the total length of all waves in the zigzag, which are quite often in the case of the (X) wave.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][54]

In a short time, the up move continues which confirms my assumptions. After that, there again two down bars. This happens at the level of 38.2% of the first zigzag, so, the wave is likely to be finishing. According to the rules of logic, this is really an X-wave. So, the next wave should be the segment of the double combination.

In this section, we should open the short position (blue oval in the chart). A stop-loss will be put at the top of the wave (X) (horizontal red line). Wave (A) of the second segment is 61.8% of the first zigzag. So, we shall put a take profit at this level.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][55]

Next, when the price gets closer to level 61.8%, there is a sharp up move and two consecutive up bars. So, we exit the short trade at the second bar. Note that the two consecutive bullish bars appeared earlier, however, they are now much higher than level 61.8%. Besides, a short price rise in the previous cases did not suggest the possible trend reversal.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][56]

Wave (B) is also likely to be finishing. It almost reaches 61.8% of wave (A) of the second segment in the larger pattern, and there are two consecutive down bars. The small size of the wave (B) suggests that the second segment in the combination is also a zigzag.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][57]

At the beginning of the wave © of the second zigzag, we shall also enter a short trade (blue oval). A stop loss is as usual at the top of wave (B), and the potential targets are at the levels of 61.8%, 100%, and 161.8% of the (A) wave of the second zigzag.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][58]

At the level of 100%, there forms a sideways move. However, there are not two consecutive up bars. So, it is yet too early to exit the short. If you like trading with the minimum risk, you can lock the position at this stage.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][59]

The exit signal is sent when the trend reversal is obvious. We have taken quite a good profit. If you opened a lock, you need to close it at this level.

Like after the end of the second zigzag, the following scenarios are possible:

Formation of the (X) wave that is followed by the next segment of the triple correction.
Formation of the (D) wave in a triangle.
Formation of the upward Elliott pattern.

Remember, according to the extended rules of logic, the zigzag where the © wave is the longest, has the weakest implications of all if it is moving down. You can learn more about the extended rules of logic in [part 16][16] in the NeoWave series. Such a zigzag is not likely to be completely retraced unless the Zigzag completes a corrective phase or the next wave (of the same degree) is more complex and time-consuming. So, we need to expect the next wave to complete to identify its type.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][60]

The end of the wave being analyzed is spotted due to the trend pivot and appearance of two consecutive down bars. This wave is likely to be either wave (1) of the impulse following the zigzag or the (D) wave of a triangle. The scenario suggesting the (X) wave is ruled out, as the current wave is too big to be the (X) wave. It is 100% of wave (A). The scenario of an impulse is also unlikely as corrective combinations often end with a triangle.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][61]

An indirect confirmation of a triangle is obtained when we compare wave (B) with the presumed wave (D). Wave (D) is 161.8% of wave (B). Such relations are typical for the waves within an expanding triangle. You can learn more about Fibonacci relationships within triangles in [part 25][25].

Now, let us identify the type of triangle unfolding. It is likely to be expanding variation as each next wave is bigger than the preceding one. Besides, as wave (B) is shorter than wave (A) this is an irregular triangle. It is also likely to be a non-limiting variation, as the trendlines of the channel meet at the point close to the beginning of wave (A). You can learn more about triangles and their construction rules in [part 14][14].

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][62]

After the second consecutive down bar closes, we shall enter a short trade. A stop loss is set at the level that is a little higher than the end of wave (D). According to the rules of progress labels for an expanding irregular triangle, which you can learn in[ part 24][24], waves (A) and (E) often relate by 161.8%. We shall use this ratio as a potential target.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][63]

As you see, wave (E) ends at the level of 161.8% of wave (A). It is signaled by the trend reversal, which is confirmed by the two consecutive upward bars. At this stage, we shall exit the short trade.

![LiteForex: Practical application of the NeoWave theory by Glenn Neely.][64]

A triangle within a complex pattern is usually the final segment. As the presumed wave (2) fails to retrace all of wave (1), and wave (3) is much bigger than wave (1), we can assume that the next pattern is an impulse.

So, we have been through the full algorithm of the market analysis, starting from the preliminary analysis and the identification of wave structures and finishing with the analysis of each wave and the detailed identification of the entry points, stop loss and take profit levels. Here, the NeoWave series is about to end. I hope this cryptocurrency trading strategy will allow you to increase your profit and avoid errors in the interpretation of Elliott waves.

It is high time you tested the theory in practice. Try to enter a trade using the above algorithm for your trading instruments. Share your results in the comments and help your colleagues with the analysis. If you don’t yet trade, you can open both a demo and a real account here, with [LiteForex][65]. This broker offers the trading platform that is well suited for the practical application of this trading system, as well as many others. If you already trade with another broker, it is a good time to change the company and join [LiteForex][65]. If so, you will have a real chance to win a house, a car, and many cool gadgets in the [contest][66] with the total prize fund of 350 000 USD.

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.

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Price chart of BTCUSD in real time mode

![NeoWave theory by Glenn Neely. Practical application.][69]

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