NEoWave Question of the Week

Question: How much can wave-2 retrace of wave-1? Most orthodox EW analysts allow 99%, but it appears NEoWave only allows about 61.8%. Answer: The amount wave-2 is allowed to retrace of wave-1 depends on two, important questions. Is the larger impulsion Trending or Terminal and is wave-2 a monowave or does it subdivide into an a-b-c? Let's address each variable one-by-one. In TRENDING Impulsions (this is where waves-2 and 4 CANNOT share any of the same price territory) 1. If wave-2 is a monowave, it should NOT retrace more than 61.8% of wave-1 2. If wave-2 subdivides into an a-b-c, on rare occasions, wave-a might retrace more than 61.8% of wave-1, but wave-c (of wave-2) must conclude at 61.8% or less of wave-1. In TERMINAL Impulsions (this is where waves-2 and 4 MUST share some of the same price territory) 1. If wave-2 is a monowave, it CAN retrace more than 61.8% of wave-1 2. If wave-2 subdivides into an a-b-c, BOTH waves-a and c (though not required) can conclude beyond a 61.8% retracement of wave-1. It is during Terminal patterns that wave-2 is allowed to retrace as much as 99% of wave-1, but never 100% or more