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Extracts "
Let us try to analyse the movement of the DJIA from 8182 to 7467 to see
whether it is a Terminal Impulse. As you know, a Terminal Impulse
comprises 5 corrective waves.
wave 1 - 8182 to 7890 = 292
wave 2 - 7890 to 8150 = 260 89% retracement of wave 1
wave 3 - 8150 to 7530 = 620 212% of wave 1
wave 4 - 7530 to 7858 = 328 52% retracement of wave 3
wave 5 - 7881 to 7467 = 414 66% of wave 3
Time taken to complete the pattern = 10 days
Time taken to retrace the pattern = 5 days
I have with me Glenn Neely's book - Elliot Waves in Motion - and I
am going to quote from several sections of the book any comments on
the Terminal Impulse.
Quote
The market action after a Terminal Impulse must retrace the entire
pattern in 50% or less of the time consumed by the Terminal pattern.
Usually, all that is required is 25% of the time (give or take a few
percentage points). A Terminal pattern always completes a pattern
(of one larger degree) and the high or low that it creates should
hold for at least twice the time period covered by the Terminal
pattern. If the Terminal is the 5th wave of an Impulse pattern,
usually the entire larger Impulse pattern will also be completely
retraced.
Unquote
Comment: In our example, the pattern was retraced in 50% time.
Quote
When using trendlines, the discovery of Terminal Impulsive activity is
very similar to those used in uncovering Triangular behavior. The
market reacts to the break of the 2-4 trendline in a non-eventful
manner. During the formation of a Terminal pattern, usually part of
it will break the larger 2-4 trendline. To get only the structure
of a Terminal pattern without the early warning of a temporary 2-4
break is rare, but not impossible.
The Wave Theory does allow you to speculate when a particular formation
(trend) has completed, but the necessary reaction to that
formation is quintessential in the verification of your assumptions.
Unquote
Comment : We experienced a temporary break of the larger 2-4 trendline
when the 2nd wave breached it.
Quote
Since Terminal and Triangle patterns consist of the same 5 corrective
waves, they tend to exhibit similar behavior characteristics. The
deciding factor is that Terminal patterns adhere to all of the
Essential Impulse Construction Rules; it is impossible for a
Horizontal Triangle to follow all the same Rules.
- When the first wave is not the extended wave, wave-2 can retrace
as much as 99% of wave-1. When the first wave does not extend, the
Terminal pattern will most likely be the c-wave of a correction
(excluding the c-wave of a triangle), not the fifth wave of an
Impulse pattern.
- An extended third wave consitutes one of the rarest possible wave
patterns. When wave-3 "extends" in a Terminal pattern (unlike all
other instances), it cannot be much longer than the first wave.
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. The
2-4 trendline should perform as usual (i.e. be clean). A 1-5 trend-
line should be drawn which will be broken by the third wave. The
5th wave should not be more than 61.8% of wave-3. You will probably
only see this pattern as the c-wave of a sequence, not the 5th wave
of an Impulse pattern.
Unquote
Comment : Our pattern under study conflicts with many points.
1. Our pattern is the fifth wave of an Impulse pattern and is
not a c-wave.
2. Wave-3 is 212% of wave-1.
3. The fourth wave retraced 52% of wave-3.
The other possibility is to consider the 5-wave movement from 8182 to
7467 as an Impulse pattern. Though the second wave retraced 89% of
the first wave, this is allowed subject to two conditions:
1. The second wave must be a monowave (which it is).
2. The 5-wave pattern must have the third wave as the extended wave
(which it is).
However, there are two fuck-ups.
1. The 2nd wave breached the larger 2-4 trendline (though marginally).
2. The 5th wave is more than 61.8% of wave-3 (66% - so again only
marginally).
So what do we do now, Rajesh? I am more or less convinced that the
market terminated its downward movement at 7467 and will move up
very strongly. I am also confident of my overall count. The last
5th wave also cannot be taken as a Terminal Impulse. It is breaking
too many rules. That leaves us with the option of counting the last
5th wave (which failed) as a 5-wave Impulse pattern. Basically I am
exceedingly strict and rigid when I am working on correct charts
which have a single point data for the entire day. Bar charts are
misleading and I dislike them for wave counts. Whenever the market
is terminating its movement (no matter how minor) in a particular
direction, it always momentarily swings in excess before turning
direction. The high or low of the day is one such momentary tick
which is given too much importance on a bar chart. Important
trendlines rest on these slightly excess swings. Because of the
very rigid rules that I follow, I need a precision chart. A bar
chart is my last resort.
have you had any luck in finding out if data of the DJIA is
available the way I want it. I don't need the data in graph form.
Only the figure at the end of the day..
If you can somehow manage to get this data, you will see a sea change in
the accuracy of the analysis.
"
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