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rules of logic to analyze triangles.

NeoWave. Part 15. Basic and advanced rules of logic to analyze triangles.
Author Reviewed by
Michael Hypov Jana Kane Published
(https://www.litefinance.org/blog/authors/mikhail-
(https://www.litefinance.org/blog/authors/jana-
19.10.2020
hypov/) kane/)

Dear friends!

In the previous training article (https://www.litefinance.org/blog/for-professionals/neowave-part-14-corrections-triangles-rules-to-identify-

triangles/), I covered triangle patterns, their variations, and basic construction rules.
If you haven’t read the previous articles in the NeoWave series, I recommend covering all the articles devoted to the NeoWave theory based on
Glenn Neely’s book Mastering Elliott Wave, starting from the first one:

Neo Wave theory. Part 1. Rules for creating charts (https://www.litefinance.org/blog/for-professionals/neo-wave-theory-part-1-rules-of-creating-

charts/).

Neo Wave theory. Part 2. Basic information on Polywaves and Structure Labels. (https://www.litefinance.org/blog/for-professionals/neo-wave-
theory-part-2-basic-information-on-polywaves-and-structure-labels/)

NeoWave. Part 3. Retracement Rule 1. (https://www.litefinance.org/blog/for-professionals/neowave-part-3-retracement-rule-1/)

NeoWave theory. Part 4. Retracement Rule 2. (https://www.litefinance.org/blog/for-professionals/neowave-theory-part-4-retracement-rule-2/)
NeoWave theory. Part 5. Retracement Rule 3. (https://www.litefinance.org/blog/for-professionals/neowave-part-5-retracement-rule-3/)

NeoWave. Part 6. Retracement rule 4. Conditions “a” and “b” (https://www.litefinance.org/blog/for-professionals/neowave-part-6-retracement-

rule-4-conditions-a-and-b/).
NeoWave. Part 7. Retracement rule 4. Conditions “c”, “d” and “e” (https://www.litefinance.org/blog/for-professionals/neowave-part-7-retracement-
rule-4-conditions-c-d-and-e/).
NeoWave. Part 8. Retracement rule 5. Conditions “a” and “b” (https://www.litefinance.org/blog/for-professionals/neowave-part-8-retracement-
rule-5-conditions-a-and-b/).
NeoWave. Part 9. Retracement rule 5. Retracement rule 6, condition “a” (https://www.litefinance.org/blog/for-professionals/neowave-part-9-
retracement-rule-5-conditions-a-and-b-retracement-rule-6-condition-a/).

NeoWave. Part 10. Retracement Rule 6. Conditions “b”, “c”, and “d” (https://www.litefinance.org/blog/for-professionals/neowave-part-10-
retracement-rule-6-conditions-b-c-and-d/).

NeoWave. Part 11. Retracement rule 7. (https://www.litefinance.org/blog/for-professionals/neowave-part-11-retracement-rule-7/)

NeoWave. Part 12. Impulsions and the rules to analyze impulse wave patterns. (https://www.litefinance.org/blog/for-professionals/neowave-
part-12-impulsions-and-the-rules-to-analyze-impulse-wave-patterns/)

NeoWave. Part 13. Corrections. Rules to identify a correction. (https://www.litefinance.org/blog/for-professionals/neowave-part-13-corrections-

rules-to-identify-a-correction/)

NeoWave. Part 14. Triangles. Rules to identify triangles. (https://www.litefinance.org/blog/for-professionals/neowave-part-14-corrections-

triangles-rules-to-identify-triangles/)
In this educational post, I will explain the formal (basic) and advanced rules of logic.

Triangle patterns. Basic rules of logic to confirm a triangle formation

Remember, the basic rules are applied to confirm the formation type.

We shall confirm the authenticity of a contracting triangle by analyzing the market action after the pattern completion.

Stage 1
First, draw a trendline through the beginning of wave B and the end of wave D. The first wave, immediately after the completion of the triangle,
must break the B-D trendline in the same amount of time (or less) as that consumed by wave E.

Stage 2
The thrust after wave E of a triangle should exceed the highest or lowest price level (depending on the direction of the thrust) achieved during
the triangle. Another important criterion to confirm the formation of a contracting triangle states that the triangle's thrust must terminate in a
time frame which is less than 50% of that taken by the Triangle (added to the end of wave E).

Formal rules of logic to confirm the formation of expanding triangles

To confirm the authenticity of an expanding triangle, you should apply the opposite requirements. In other words, after the E-wave of an
expanding triangle, the market should either not retrace the E-wave completely breaking the B-D trendline, orit will take more time to completely
retrace wave E than it took to form.

Let us study the example of how a contracting non-limiting triangle (analyzed in the previous article) is confirmed.

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(https://cdn.litemarkets.com/cache/uploads/blog_post/cryptocyrrency/hyipov/2020.04.29/BTCUSD_hypov_1.jpg?
q=75&s=a5bbd3ce354eecd91a2d140d7e28a7e5)
First, we draw the B-D trendline. The first wave immediately after the pattern’s completion, should break the B-D trendline in the amount of time
that is no longer than that consumed by wave E. As you see, the blue area, which marks the E-wave’s price territory, is smaller than the red area,
which highlights the period when the post-triangular wave is forming and breaks the B-D trendline. Therefore, the first stage of the pattern
confirmation is completed.

(https://cdn.litemarkets.com/cache/uploads/blog_post/cryptocyrrency/hyipov/2020.04.29/BTCUSD_hypov_2.jpg?
q=75&s=f4931b644b3eebaebdeed080202e3a0a)
Now, let us look at the thrust after the E-wave. It makes a new high (the blue dot in the chart) that exceeds the highest level (the pink line in the
chart) achieved during the formation of the triangle. Therefore, the second stage also confirms the triangle. Next, I will cover the advanced rules
of logic applied to triangles, exceptions to the rules, as well as the principles of identification of price patterns composed of monowaves.

Advanced rules of logic for a contracting triangle

Remember, the advanced rules of logic are used to analyses the market action after the pattern completed.

A thrust always follows a contracting triangle, which depends on the pattern’s variation. The thrust out of a contracting triangle should always
exceed the highest or lowest price reached during the formation of the triangle unless it moves against the direction of wave B.

A contracting triangle may be the B-wave or the last phase in a correction, or it may be the fourth wave in an impulse. Besides, triangles create
important support/resistance levels. Namely, when the triangle is finished, its apex point will be a significant support to any decline or resistance
to any rise. However, the “horizontal” influence of the triangle’s apex point will usually hold for only two or three violations. If the market has
moved up or down through the price level occupied by the apex point more than three times, the market is indicating that the price level has lost
its significance.

Advanced rules of logic for a contracting limiting triangle

This variation of triangles doesn’t depend on the previous pattern, unlike most corrections. Post-triangular action in a limitingtriangle is
determined by the size of the widest segment of the triangle and the placement of the triangle’s apex point. Remember, the apex point is created
by the converging trendlines which form the triangle. The triangle being analyzed is limiting, the market action after the thrust usually returns to
the breakout point and often exceeds it.
Depending on the slope of the trendlines which create the Triangle, the thrust could be between 75% and 261.8% of the widest segment of the
triangle. The time period of the thrust is generally equal to that it took the market to cover the distance from the end of the E-wave to the apex
point. Differently put, the thrust should terminate almost exactly into the time periodwhere the converging trendlines crossed.
If the triangle is a B-wave of a correction or the 4th wave in an impulse, but the post thrust action Live
has Chat
not returned to the breakout point or
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beyond and the market action has exceeded the original thrust's highest or lowest price level, there must be a terminal pattern forming.
There also can be forming the x-wave if the triangle is the B-wave of a larger formation. The x-wave is most likely to be forming when the post-
thrust action fails to break the beginning of the triangle after it Official
(https://www.litefinance.org/) reaches Partner of
the time period of the triangle’s apex.
Leicester City F.C. ☰
Advanced rules of logic for a horizontal, contracting limiting triangle
The thrust out of such a triangle usually falls in the range of 75% and 125% of the widest segment in the triangle.

Advanced rules for an irregular contracting limiting triangle

If the B-wave in the pattern exceeds the end of wave A (in both directions), the thrust out of this triangle may reach 161.8% of its widest segment.

Advanced rules of logic for a running contracting limiting triangle

This is the most powerful variation of triangles. The thrust out of the triangle may reach 261.8% of the widest segment in the triangle. Besides, if
the triangle is drifting upward, the trend is strong, it is drifting downward, the trend is weak.

Advanced rules of logic for contracting non-limiting triangles

A non-limiting triangle doesn’t impose any specific rules for post-triangular market action. So, the only way to predict further market action is to
analyze the action preceding the correction. If a correction with a triangle, it means the correction must be complex, that is a double or triple
pattern. If it is followed by an impulse, the impulse should be at least the same length of the previous impulse. The non-limiting thrust should not
terminate during the time period occupied by the apex point.

(https://cdn.litemarkets.com/cache/uploads/blog_post/cryptocyrrency/hyipov/2020.04.29/BTCUSD_hypov_3.jpg?
q=75&s=e84d160011233d41ee6c8aa2cc61cc8a)
The above chart displays the contracting non-limiting triangle. Let us see how the advanced rules of logic work, using it as an example. The thrust
of the non-limiting triangle should be longer than the widest segment in a triangle. The wave, following the E-wave, is a little more than 100% of
wave A, which is the widest in the triangle being studied. Besides, in accordance with the rules of logic, the thrust doesn’t terminate within the
price period occupied by the apex point.

Advanced rules of logic for expanding triangle

The expanding triangles usually imply the opposite attributes of the contracting triangles. The thrust is usually less than the widest leg of a
triangle. When the pattern takes place in the B-wave position, there must be a c-wave failure. If an expanding triangle completes a larger pattern,
it is unlikely that the next move will completely retrace the E-wave of the triangle. If it does, the retracement should take more time than that
consumed by the E-wave.

Advanced rules of logic for an expanding limiting triangle

The only implicationthat is reliable about this pattern is it should not be completely retraced by the following wave.

Advanced rules of logic for an expanding non-limiting triangle

These triangles most commonly serve as the first or last phase of a complex Corrective pattern, or as an x-wave. If it is the first segment of a
complex correction, it should not be completely retraced by the next wave. If it is the last phase of a complex correction, then it should be
completely retraced by the next move.

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 (https://www.litefinance.org/) Official Partner of
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(https://cdn.litemarkets.com/cache/uploads/blog_post/cryptocyrrency/hyipov/2020.04.29/BTCUSD_hypov_4.jpg?
q=75&s=6c8307434d97edce57226ee07fa9cd44)
Let analyze the expanding triangle, I studied in the previous article. As you see, the wave following the E-wave doesn’t completely retrace the
triangle. Therefore, it can be the x-wave or the first segment of a larger complex correction. We could analyze the pattern in the inverted order.
For example, if we presume that the non-limiting triangle is the last phase of a larger correction, its thrust likely to reach the beginning of the
triangle.
That is all for today. In the next training article (https://www.litefinance.org/blog/for-professionals/neowave-part-16-extended-rules-of-logic-for-
zigzags-and-flat-corrections/), I will cover advanced rules of logic for zigzags and identification of price patterns with larger formations.

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What should I read next?

02 Nov. 2020 11:29

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.
(https://www.litefinance.org/blog/for-professionals/neowave-part-17-extended-rules-of-logic-for-complex-corrections-exceptions-to-the-rules-2020-05-07/)

26 Oct. 2020 10:06

NeoWave. Part 16. Extended rules of logic for Zigzags and Flat corrections
NeoWave theory by Glenn Neely. Extended rules of logic for corrections. Zigzags and Flats
Live Chat (https://my.litefinance.org/?openPm=2)
(https://www.litefinance.org/blog/for-professionals/neowave-part-16-extended-rules-of-logic-for-zigzags-and-flat-corrections/)
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19 Oct. 2020 16:39
Official Partner of
Leicester City F.C. ☰
NeoWave. Part 6. Retracement rule 4. Conditions “a” and “b”
A further description of the Elliott Wave Principle, NeoWave by Glenn Neely. This article deals with the fourth rule of the retracement
proportions.
(https://www.litefinance.org/blog/for-professionals/neowave-part-6-retracement-rule-4-conditions-a-and-b/)

12 Oct. 2020 14:17

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

I will cover the most difficult Elliott wave patterns, triangles
(https://www.litefinance.org/blog/for-professionals/neowave-part-14-corrections-triangles-rules-to-identify-triangles/)

30 Sep. 2020 12:14

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

Elliott wave patterns according to the NeoWave theory.
(https://www.litefinance.org/blog/for-professionals/neowave-part-13-corrections-rules-to-identify-a-correction/)

29 Sep. 2020 12:32

NeoWave theory. Part 4. Retracement rule 2

A further description of the Elliott wave theory, the NeoWave by Glenn Neely. This article covers the second rule of retracement ratios
(https://www.litefinance.org/blog/for-professionals/neowave-theory-part-4-retracement-rule-2/)

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