Dear friends!

In the previous training article, I covered basic and advanced rules of logic to analyze triangle
patterns.

If you are not familiar with the NeoWave theory, I suggest you should read the all the articles in
the NeoWave series, based on Glenn Neely’s book Mastering Elliott Wave, starting from the first
one:

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

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

NeoWave. Part 3. Retracement Rule 1.

NeoWave theory. Part 4. Retracement Rule 2.

NeoWave theory. Part 5. Retracement Rule 3.

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

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

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

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

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

NeoWave. Part 11. Retracement rule 7.

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

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

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

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

All the material in this article is based on my own cryptocurrency trading experience and Glenn
Neely’s book Mastering Elliott Wave.

I covered basic rules to analyze the zigzags and flats in Part 13 of the NeoWave series. In this
article, I will explain the extended rules of logic to analyze corrections, namely, zigzags and flats.

The article covers the following subjects:

 Extended rules of logic applied to a Zigzag pattern

 Extended rules of logic to analyze a flat pattern
Extended rules of logic applied to a Zigzag pattern

Remember, a group of waves is a zigzag pattern when its C-wave is between 61.8% and 161.8%
of the A-wave. Let us study three extended rules.

Wave C is the longest

This type of Zigzag has the weakest implications of all if it is moving down, and the strongest if it
is moving up. It 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.

Wave C is equal to wave

Anything could happen after this pattern. This zigzag may or may not be completely retraced.

Wave C is shorter than wave A

This pattern is almost always completely retraced unless it is followed by an x-wave.

Let us see how the extended rules of logic work on the example of a zigzag pattern. In our case,
it is clear that wave C is shorter than wave A. Therefore, it should be completely retraced unless
it is an x-wave. In fact, the beginning of the pattern (blue horizontal line) is reached by the next
wave, whose end is marked by the pink horizontal line.

Elongated zigzag

This pattern most often occurs in terminal impulse patterns and triangles. Remember, the
impulse is terminal when waves 2 and 4 share some of the same price territories. It could rarely
occur as any segment of a contracting triangle (except the E-wave) or any leg of an expanding
triangle (except the A-wave). It shouldn’t be completely retraced by the next wave of the same
degree.

The chart displays an elongated zigzag. Its beginning is marked by the horizontal pink line. The
next wave (the blue horizontal line) doesn’t reach the beginning of the zigzag (so, it is not fully
retraced).

Double zigzag

This pattern is composed of two successive zigzag connected by the x-wave. If this pattern is
completely retraced, it is most likely the last segment of the 5th extension terminal. In other
cases, the pattern is not retraced.
The above chart displays a double zigzag. The next wave (the blue horizontal line) finishes much
earlier than the beginning of the pattern ( pink horizontal line). Therefore, this zigzag is not a
5th extension terminal.

Triple zigzag

A triple zigzag (the pattern composed of three successive zigzags connected with the linking z-
waves). Remember, x-waves are linking waves that join simple corrective patterns in more
complex formations). A triple zigzag is usually the longest segment of a terminal or a triangle.
Triple zigzags feature the following regularities.

 If its movement is downward, it implies the market is currently very weak. If

its movement is upward, the market is currently strong.
 When a triple zigzag is a part of a Terminal pattern, it should definitely be the
extended segment.

 If it is a part of a triangle, it is the largest segment of the triangle.

 If it is a part of a flat or contracting triangle, a triple zigzag can neverbe

completely retraced by the pattern which immediately follows.
As a triple zigzag is extremely rare on the bitcoin chart, I depicted a triple triangle schematically
on the chart. As you see that this pattern is composed of three successive zigzags connected
with the x-waves. The blue horizontal line marks the final point of the wave immediately after
the zigzag, the pink line marks the beginning of the triple zigzag. As the end of the next wave
doesn’t reach the beginning of the zigzag (i.e. it is not completely retraced) we can presume that
it is a part of a flat or a contracting triangle.

Extended rules of logic to analyze a flat pattern

Remember, I covered the advanced rules of logic for flats in detail in Part 13 of the NeoWave
theory. I will now cover the extended rules to analyze flat corrections.

B-failure

A B-failure is the most neutralpattern existing under the WaveTheory. Nothing, in particular,
can be expected following this pattern since virtually anything is possible.
The above chart displays a B-failure flat pattern, as the B wave is a little less than 61.8% of wave
A.

The C-wave is about 100% of the weak B-wave. So, there is a B-failure and we can’t expect
anything special after this wave.

Common
This is also quite a neutral pattern and doesn’t imply any particular future market action.
However, it is more definitely more powerful than a Zigzag.

The above chart displays a common flat with a normal wave B, as it is a little more than 81% of
wave A.

Wave C is between 100% and 138.2% of normal wave B. Therefore, there is a common flat. It
doesn’t imply any particular following market action.
Irregular

This pattern is quite rare and abnormal. It creates a state of self-contradiction. Namely, when
the B-wave of a pattern exceeds the beginning of wave A, it demonstrates the power of the
trend of one higher degree. When the C-wave turns around and exceeds the end of wave B, it
nullifies the power exhibited by the B-wave creating an illogical condition. Such market behavior
is usually observed in Terminal impulses or triangles, not in flats. That is why it is called
irregular.

The above chart schematically displays a flat correction. Wave B is a little more than 101% of
wave A.
Wave C is between 100% and 161.8% of wave A, it also exceeds the beginning of wave B.
Therefore, it is an irregular flat. According to the extended rules fo logic, it is likely to be a part
of a larger impulse pattern or a triangle.

Elongated flat

This is one of the most deceiving patterns in the NeoWave theory. This pattern occurs almost
always in triangles. It occasionally can be found in terminal impulse patterns. When it is a part
of a triangle, it is almost always the entire segment of the triangle. In rare instances, it will occur
as a smaller segment of a complex correction which is the entire leg of a triangle.
The above chart schematically depicts a flat correction. The B-wave is a little more than 101% of
wave A.

Wave C is more than 161.8% of wave A, it also exceeds the beginning of the B-wave. Therefore,
it is an elongated flat. According to the extended rules of logic, it is likely to be a segment of a
triangle. In rare instances, it can be a part of a terminal impulse.

Double flat
These are not very common patterns. The pattern to follow may completely retrace the double
flat unless the double flat finishes with a severe C-wave failure, or it concludes a larger
formation, such as any variation of a terminal impulse. The move following a double flat is
usually quite fast and intensive.

The above chart presents a double flat that is composed of two flats with an x-wave between
them. The second formation on the left is not a severe C-failure. So, the wave following the
double flat (the end of this wave is marked by the horizontal blue line) exceeds the beginning of
the flat correction (the horizontal pink line).

Triple Flat

Triple flat. These are very rare pattern, so I will hardly find a practical example of a triple flat on
the bitcoin chart. However, it is important to know that the pattern which follows a triple flat
will completely retrace it only if the triple flat is the last leg of a fifth extension terminal. In this
case, the retracement pattern will be on one larger degree than the triple flat.

Remember that Elliott waves vary in degree, and each wave of a larger degree is composed of
smaller waves. I have many times described the wave degrees in the educational articles
devoted to the wave theories developed by Prechter and Williams. If you are not yet familiar
with wave degrees and wave cycles, you can learn about them in this article.
The chart displays a triple flat that is three successive flats connected with x-waves. As it is
featured by most such patterns, the wave following the triple flat (its end is marked by the
horizontal blue line) doesn’t reach the beginning of the triple pattern (the horizontal pink line),
i.e. the triple flat is not completely retraced.

C-failure

This pattern must be completely retraced by the following market move of the same degree. If
the C-failure completes the corrective phase, the following impulse wave should be larger than
the previous impulse wave which is moving in the same direction and is of the same degree. If
the C-failure is not the end of the larger correction, the wave to follow is likely to be the X-wave
of a double three running correction, or, in rare instances, it is the B-wave of a running
correction.
The above chart displays a C-failure (as the C-wave is smaller than the A-wave). The C-failure is
followed by the wave that, according to the extended rules of logic, reaches the beginning of
the C-failure (the horizontal pink line) and finishes quite higher than it (the horizontal blue line).

As this pattern completes a corrective phase, the following impulse wave should be larger than
the previous impulse pattern. This is really so, as you see from the above chart. I marked the
corrective phases with the blue lines and the impulses – with the yellow lines.
Irregular failure

This pattern must be completely retraced the following wave. This is usually the second wave of
a trending pattern, which is followed by an extended third pattern, which is most often 161.8%
of the previous impulse wave.

The next patterns will indicate the power of the countertrend, which is moving in the opposite
direction that they conclude.

A flat correction is schematically drawn in the above chart. As the C-wave is within the channel
drawn along with the high and the low of the A-wave, this correction is an irregular failure.
According to the extended rules of logic, the wave, following the irregular failure, should
completely retrace the pattern. In our example, it not only retraces the irregular flat but even
exceeds it.

That is all so far. In the next educational post, I will finish covering the extended rules of logic
for wave patterns under the NeoWave. I will describe the exceptions to the rules, and the
peculiarities of the wave labels in the NeoWave theory.

Take care of yourself and your money! 

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I wish you good luck and good profits!

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Price chart of BTCUSD in real time mode

Periods
 M1
 M5

 M15

 M30

 H1

 H4

 D1

 W1

Zoom1D1W1M3M6M1YALL30. Nov14. Dec28. Dec11. Jan25. JanDec '20Jan '21F…

15k20k25k30k35k40k45k
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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WRITTEN BY
Mikhail Hypov
Investment analyst and independent trader

What should I read next?

30 Apr. 2020 17:59

NeoWave. Part 15. Basic and advanced rules of logic to analyze triangles.
A further study of the most difficult Elliot wave patterns, triangles, based on Glenn Neely’s
NeoWave theory. Basic and advanced rules of logic to analyze triangle patterns.

07 May. 2020 16:26

NeoWave. Part 17. Extended rules of logic for complex corrections. Exceptions to the
rules.
NeoWave theory by Glenn Neely. Extended rules of logic for complex corrective patterns.
Exceptions to the rules. Identifying wave patterns.