Missing Waves and Emulations. Definition. Variations. Properties.

Dear friends!

In the previous training articles, I covered the application of channeling and Fibonacci
relationships. This article will deal with the last section in the NeoWave series, I will describe
missing waves. I will also write about patterns, which, in many ways, can imitate other
variations of wave patterns, not being authentic Elliott patterns.

If you are not familiar with the NeoWave theory, I recommend you to read all the articles,
starting from the first one, in the NeoWave series based on Glenn Neely’s book Mastering Elliott
Waves.

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.

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

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

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

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

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

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

NeoWave. Part 22. Progress labels in flat corrections.

NeoWave. Part 23. Progress labels in triangles.

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

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

Before I go on, I want to stress that all the examples below are drawn schematically, they are
not real price charts. I suggest you find real examples by yourself and share your discoveries in
the comments. Practical application of the information you learn is a very efficient way to
develop new skills. If you haven’t yet selected a trading platform to practice your trading skills,
register an account with LiteForex. This is fast, easy, and free of charge.

Where and when do missing waves occur?

The identification of missing waves plays an important role in the analysis of short-term market
action. You can witness missing waves when the available data create a price action that falls
between the monowave and polywave stage of development. A missing wave is a wave that
merges with the surrounding segments of the pattern into a single monowave. Missing waves
occur only on a polywave scale. Missing waves can’t occur on a multiwave scale or higher.
Missing waves are most common in non-standard complex corrective polywaves. They are also
possible in Impulse polywaves or in a formation when the market is preparing to make a
significant change in trend. A missing wave can be detected indirectly based on the illogical
integration of pattern implications and based on the strange development of price behavior,
which I will further describe.

How do missing waves occur?

As you already know from the previous educational articles all Elliott patterns require a
minimum number of monowaves to be correctly formed. For example, an impulse polywave
must contain at least five segments, it can’t be formed with only four monowaves. A correction
requires at least three monowaves. To make a specific number of monowaves, you should have
a specific number of data points. Here is a listing of the minimum data points for polywave
patterns, so that a pattern can form without missing waves:

 Impulse wave – 8;
 Triangle – 8;

 Zigzag – 5;
  Flat – 5;

 Double flats and zigzags – 10;

 Double combinations ending with triangles– 13;

 Triple flats and zigzags – 15;

 Triple combinations ending with zigzags– 18.

As an example, the above BTCUSD chart roughly outlines a polywave flat correction. Red dots
mark data points that are the beginning and the ending points of monowaves. Note that the
beginning of the pattern (zero point) is also taken into account. In our example, there six data
points, so the pattern meets the minimum requirements for the number of points. I should
note that the presence of the minimum number of data points doesn’t mean that the missing
wave is impossible here, it is just less likely. Neely writes that for each additional data point
above the minimum, the chances increase geometrically that a missing  wave  will not be
present. Once the number of data points reaches twice the minimum level a
missingwaveshould be considered impossible, as there will be too many details that any wave
could be missing. Any number of data points below the minimum indicates a missing wave is a
certainty if the wave count is correct (the number of data points should be at least 50% of the
minimum requirements, otherwise the pattern will be so simple that it will be on the register as
a monowave).

Remember, you can suspect a missing wave when analyzing the waves using the retracement
rules. These rules are covered in the parts 3-11 in the NeoWave series:
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.

Which patterns are susceptible to missing waves?

The most susceptible patterns to missing waves are complex corrective polywaves(corrections
that involve x-waves). Almost without any exceptions, the (X) will be the missing wave. This is
due to the fact that x-waves are almost always the smallest corrective waves of such patterns.
That is why they are more likely than other segments to be missing. In more rare instances,
impulsive polywave patterns that have a 1st or 5th wave extension can “miss” their smaller
corrective phase. In a 1st wave extension, it would be wave 4. In a 5th wave extension, the
missing wave would be wave 2.

Emulation

An emulation occurs when one pattern (corrective or impulsive) is imitatingthe behavior of a

pattern from the opposite class. Most often, an emulation occurs on the short-term price action
of a polywave. When one pattern emulates another, it generally indicates the pattern is
“missing wave,”. Below, I will give a few examples of patterns emulating the behavior of other
Elliott patterns.

Double Failure Emulation

This pattern can only fool you during its formation and for a short time period of time after it is
complete. Most often, a double failure can temporarily mislead you into the assumption that a
Triangle is forming.
The above chart roughly outlines a double failure. It is emulating a triangle at the stage of its
formation. I marked the borders of a false triangle with pink lines. You can identify this pattern
at the stage of the wave (D) formation. As it exceeds the highs of waves (A) and (B) (the
horizontal green and red lines), this pattern can’t be a triangle (in a contracting triangle, only
wave (E) has such a possibility. An indirect clue can come from the application of Fibonacci
relationships if waves (A) and (C) do not relate by 61.8% as it is typical in triangles. This signal
may become a reason to suspect a false triangle forming, but the final conclusion should be
made only after the (D) wave exceed the highs of waves (A) and (B).

Double Flat Emulation

This pattern, if missing the (X) wave, could easily be mistaken for an Impulse wave with a 3rd
wave extension. There are a few clues the pattern is a double flat:

 There is noalternation in time, price, or structure between waves (2) and (4).
The rule means that two close waves of the same type (within the same
pattern) should be different in price, time, and structure.
 The supposed third extension is not more than 161.8% of the first wave. This
signal means that the third wave is nor an extension. Therefore, the fifth
wave should be an extension. If it doesn’t happen, the pattern can’t be an
impulse.
The above chart roughly outlines a double flat that looks like a terminal impulse. Note that the
supposed wave (2) is more than 61.8% of the supposed wave (1). Besides, the supposed waves
(2) and (4) are similar in price, time, and structure. So, the alternation rule is not observed.

The supposed third extension is less than 161.8% of wave 1, and so, it is not an extension. As
the fifth wave is not also an extension (it is less than the third wave in price), the pattern can’t
be an impulse. So, this is a double flat correction that emulates an impulse pattern. If you
witness a situation like the one shown in the chart, divide the longest wave in half (the red circle
in the chart). The halfway point should be where a missing wave X occurred.

Emulation that occurs in Double and Triple Zigzags and other

combinations starting with a zigzag

Wave (B) in the first zigzag should not retrace more than 61.8% of wave (A). Like in the case with
the double flat, a double zigzag can look like an impulse with the third extension. However, in
the case with a zigzag, the alternation rule won’t work for waves (2) and (4). In some cases, this
signal could be the only signal that the pattern is corrective. Besides, unlike double zigzags,
impulses rarely channel well.

An additional clue can be Fibonacci relations. The presumed 3rd extension is only 161.8% or
less of the presumed 1st wave. This should not happen in a real Impulse pattern unless the 5th
wave extends. Another clue will not come until much later when the market retraces the double
zigzag by more than 61.8% of the total length of all its five waves. This is normal for a corrective
pattern.

Triple zigzags with missing X waves can emulate double zigzags, as double zigzags emulate
impulsions. There are should be the following signals:

 A triple zigzag will usually channel far too well to be considered an Impulse
pattern;
 The declining waves are too similar in price and time coverage leaving the
market without an extended wave, which is mandatory for impulsive activity;

 The action after the presumed 5th wave did not break the 2-4 trendline soon
enough.
The above Bitcoin chart roughly outlines a false impulse that can be emulated by the double
zigzag. Note that wave 2 of the presumed impulse retraces 61.8% of wave (1). Waves (2) and (4)
are similar in price and time, so the alternation rule is not observed.

As I have already written, impulses, unlike double and triple combinations, impulses will hardly
channel well. In our example, almost all starting and ending points touch the channel lines.
Besides, waves (1), (2), and (3) are roughly equal. This means there are no extensions in this
pattern, so it can’t be an impulse.
Taking into account the signals, I described above, we can conclude that this is a double zigzag.
Therefore, we divide the longest wave (the one that looks like wave 3) in half and put a red
circle at the halfway point. This point should mark the place where the missing wave X
occurred. Here, I am about to end explaining the theoretical part of the NeoWave theory. You
should always apply all the theory to practice. Try to discover the patterns containing missing
waves, double and triple flats, and zigzags. Mark with the reds the places where missing waves
occur. The LiteForex trade platform is very convenient and provides more than enough
functions. If you haven’t yet chosen your broker, it’s high time you started trading
with LiteForex. Besides, there is a wonderful opportunity to win a dream house, a brand new
car, and cool Apple gadgets in the dream draw with the total prize fund of 350 000 USD.

In the next training article, I will demonstrate principles of the market analysis using the
NeoWave theory on examples. After that, you can start trading using the NeoWave with
LiteForex.

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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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

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