00:00:00,000 --> 00:00:10,000

Hi everybody, we're still missing about 40 people but I assume they'll trickle in
as

00:00:10,000 --> 00:00:12,000

we start the class.

00:00:12,000 --> 00:00:18,000

Just wanted to go through questions that Abgeny sent in.

00:00:18,000 --> 00:00:23,000

He's asking about using logarithmic charts.

00:00:23,000 --> 00:00:28,000

The answer of when you use them or don't use them is basically depending on how
much a

00:00:28,000 --> 00:00:29,000

market moves.

00:00:29,000 --> 00:00:35,000

If you can use them all the time, that's ideal but if it's too much trouble,
especially if

00:00:35,000 --> 00:00:41,000

you're doing charts by hand or if your computer system doesn't manage logarithmic
scales very

00:00:41,000 --> 00:00:48,000

well, then as long as the price of the market hasn't moved up or down, say more
than 25

00:00:48,000 --> 00:00:51,000

percent or so, then it's probably fine.

00:00:51,000 --> 00:00:56,000

If you move into the 50 percent range and especially if it starts to get into the
100

00:00:56,000 --> 00:01:02,000

range, where maybe it starts at 100 and goes to 200 or 400 or something like that
or

00:01:02,000 --> 00:01:06,000

more, you definitely need to use logarithmic charts.

00:01:06,000 --> 00:01:12,000

So let me unlock your mic if you're in the class.

00:01:12,000 --> 00:01:16,000

So Abgeny, do you have any further questions?

00:01:16,000 --> 00:01:18,000

Yeah, thank you very much, Glenn.

00:01:18,000 --> 00:01:19,000

It's clear.

00:01:20,000 --> 00:01:22,000

So do you need any special requirements?

00:01:22,000 --> 00:01:29,000

Do you measure retracement in a different way or are the main principles the same?

00:01:29,000 --> 00:01:33,000

Well, the best way to measure distance and retracement in Fibonacci relationships
is

00:01:33,000 --> 00:01:35,000

definitely on log scale.

00:01:35,000 --> 00:01:40,000

But if the market hasn't moved very much, if it's going sideways for a while, then
those

00:01:40,000 --> 00:01:42,000

log charts aren't that necessary.

00:01:42,000 --> 00:01:48,000

It's only when it's progressing comfortably up or down that you need to use log
charts

00:01:48,000 --> 00:01:50,000

to get proper retracement in relationships.

00:01:50,000 --> 00:01:55,000

So the measurement you're looking at in log scale will be the actual physical
distance.

00:01:55,000 --> 00:02:03,000

So if it's one inch, you want it to be 1.61 inches, maybe for wave C or 0.61 on a
minimum

00:02:03,000 --> 00:02:09,000

for wave C, and that's on physical distance right on the chart.

00:02:09,000 --> 00:02:10,000

Okay.

00:02:10,000 --> 00:02:12,000

Otherwise you have to do it all by hand or on a calculator.

00:02:12,000 --> 00:02:13,000

Okay.

00:02:13,000 --> 00:02:14,000

Thank you.

00:02:14,000 --> 00:02:15,000

Thank you very much.

00:02:15,000 --> 00:02:16,000

Okay.

00:02:17,000 --> 00:02:21,000

And then Laul had a question.

00:02:21,000 --> 00:02:23,000

This is regarding a specific situation.

00:02:23,000 --> 00:02:24,000

We'll have to say that for later.

00:02:24,000 --> 00:02:30,000

So let's go ahead and get started because this is the most complicated chapter in
my

00:02:30,000 --> 00:02:31,000

book.

00:02:31,000 --> 00:02:36,000

But I think a lot of you will be very happy about approaches you can take that will

00:02:36,000 --> 00:02:43,000

dramatically apply chapter three and the beginning process of analysis, how you
start

00:02:43,000 --> 00:02:44,000

and what you do.

00:02:45,000 --> 00:02:52,000

First and foremost, even though I do say it in my book otherwise, when I get very
clear

00:02:52,000 --> 00:02:56,000

that when you're beginning the analysis of any market, you always want to start
from

00:02:56,000 --> 00:03:03,000

the largest timeframe and data series you can get first and work your way down.

00:03:03,000 --> 00:03:06,000

This would be even if you have to construct the data.

00:03:06,000 --> 00:03:10,000

So let's say you're dealing with something that covers 50 years.

00:03:10,000 --> 00:03:17,000

If you can get half half your data or two and a half your data where you'd have the

00:03:17,000 --> 00:03:21,000

highs and the lows in the order they occurred in real time and you plot them in the
fashion

00:03:21,000 --> 00:03:25,000

we talked about in chapter two last time, then that's ideal.

00:03:25,000 --> 00:03:30,000

And your goal once you do that is you want to control the complexity of your chart
so

00:03:30,000 --> 00:03:37,000

that it doesn't have more than about 55 monowaves on the maximum in and no less
than about 13

00:03:37,000 --> 00:03:39,000

on the minimum side.
00:03:39,000 --> 00:03:47,000
And if it's a move that's going somewhere, it's trending, you want that 13 to 55
monowave

00:03:47,000 --> 00:03:51,000

structure to progress at about a 45 degree angle.

00:03:51,000 --> 00:03:58,000

So fitting in with almost a perfect square, if that action is going mostly
horizontal,

00:03:58,000 --> 00:04:01,000

then you're going to want it to fit in half of a square.

00:04:01,000 --> 00:04:04,000

So you take a square and you cut it in half and so it'd be a rectangle.

00:04:04,000 --> 00:04:11,000

So half of a square would be the ideal structure that would fit horizontal price
action.

00:04:11,000 --> 00:04:17,000

So always begin your analysis from the largest time frame first.

00:04:17,000 --> 00:04:25,000

Get it to where that time frame available gets your complexity level between 13 and
55 monowaves.

00:04:25,000 --> 00:04:29,000

Once you've done that, then you want to find the highest high and the lowest low
and figure

00:04:29,000 --> 00:04:31,000

out which one occurred first.

00:04:31,000 --> 00:04:34,000

And that's where you're going to start your analysis.

00:04:34,000 --> 00:04:40,000

And if the low happened first, then of course, you're in an uptrend and you're
going to

00:04:40,000 --> 00:04:47,000

look at the retracement of the first up move and decide was it retraced less than
38%,

00:04:47,000 --> 00:04:51,000

more than 38%, less than 61, more than 61.

00:04:51,000 --> 00:04:56,000

Anywhere in the 38 to 61% range is going to be the typical impulsive range where
you

00:04:56,000 --> 00:05:01,000

can consider the move prior to it in impulsive pattern.

00:05:01,000 --> 00:05:07,000

If it's less than 38 and especially if it's less than 33, then it starts to move
into

00:05:07,000 --> 00:05:08,000

the corrective territory.

00:05:08,000 --> 00:05:12,000

And if it's more than 61, it also moves into corrective territory.

00:05:12,000 --> 00:05:18,000

So virtually anything other than 38 to 61% retracement is going to put you into
more likely

00:05:18,000 --> 00:05:27,000

corrective territory for the move that happened before the 38% or 61, before the
correct.

00:05:27,000 --> 00:05:28,000

Okay.

00:05:28,000 --> 00:05:33,000

So let's go on to the next page.

00:05:33,000 --> 00:05:36,000

This shows a chart that's just laid out over a period of time.

00:05:36,000 --> 00:05:42,000

You can see the amount of waves that are plotted in the order that the highs and
lows occur.

00:05:42,000 --> 00:05:45,000

So it looks like a chart.

00:05:45,000 --> 00:05:49,000

And this will produce much better results than trying to use bar charts.

00:05:49,000 --> 00:05:54,000

So if you have, I think we might even have this, if you have trace station, we
might have

00:05:54,000 --> 00:06:00,000

some old pieces of software that takes any market and plots the highs and lows in
order.

00:06:00,000 --> 00:06:05,000

I haven't talked to Stefan about this in a long time because I prefer using the
Excel

00:06:05,000 --> 00:06:08,000

data sheets and letting it do the work there.

00:06:08,000 --> 00:06:10,000

But we might have that.

00:06:10,000 --> 00:06:15,000

So if you have trace station and you're interested right to Magellan and ask him if
as long as

00:06:15,000 --> 00:06:20,000

you have trace station, if we still have that software and we can look forward and
see if

00:06:20,000 --> 00:06:22,000

we can send that to you.

00:06:22,000 --> 00:06:24,000

But you're going to want to plot it all the day you have.

00:06:24,000 --> 00:06:27,000

And then here you can see here is the lowest low.

00:06:27,000 --> 00:06:29,000

It happened first.

00:06:29,000 --> 00:06:30,000

Here's the highest high it happened second.

00:06:30,000 --> 00:06:33,000

So your analysis would begin from this low.

00:06:33,000 --> 00:06:37,000

And that's when you would begin deciding, you know, is this first move up or trace
more

00:06:37,000 --> 00:06:44,000

than 61% less than 61%, 38%, whatever the situation is and based on that
information,

00:06:44,000 --> 00:06:50,000

you would determine that this move might be impulsive, possibly corrective, but it
could

00:06:50,000 --> 00:06:54,000

be an impulsive move based on the kind of action that happened afterward.

00:06:54,000 --> 00:06:58,000

And then you would do the same thing for every single move on the chart and you're
going

00:06:58,000 --> 00:07:05,000

to piece together over time a series of mono waves each marked with a three or five
and

00:07:05,000 --> 00:07:08,000

then looking for sequences which we'll talk about later.

00:07:08,000 --> 00:07:12,000

So that's the first and most important thing is starting from your longest time
frame chart.

00:07:12,000 --> 00:07:17,000

And let's just pretend this is a six monthly high load chart.

00:07:17,000 --> 00:07:22,000

So we start the six monthly analysis from here and you go through the process and
it

00:07:22,000 --> 00:07:26,000

appears that something important may have ended here because the market has a
violent

00:07:26,000 --> 00:07:28,000

change of character with this drop.

00:07:28,000 --> 00:07:31,000

It's bigger than this decline, this decline, and this decline.

00:07:31,000 --> 00:07:35,000

And it's faster and larger than the very last advance.

00:07:35,000 --> 00:07:40,000

So suggest something old ended and something new began.

00:07:40,000 --> 00:07:45,000

So on your six on your six monthly chart, this might be the structure you have and
where

00:07:45,000 --> 00:07:50,000

you start the analysis, but when you move to a smaller timeframe, a monthly chart,
which

00:07:50,000 --> 00:07:55,000

is approximately one fifth of six months, you would begin your monthly chart from
the

00:07:55,000 --> 00:08:01,000

most crucial important turning point on the six month chart after the beginning of
the

00:08:01,000 --> 00:08:02,000

chart.

00:08:02,000 --> 00:08:06,000

So you go through this process, you look for these violent price movements like
this, say,

00:08:06,000 --> 00:08:10,000

well, on this chart, this is probably where something new began and I'll start a
monthly

00:08:10,000 --> 00:08:12,000

chart from here.

00:08:12,000 --> 00:08:16,000

And then as you work through your monthly chart, you might realize that this looks
like

00:08:16,000 --> 00:08:21,000

a flat pattern and you could start a weekly chart from here and you might
eventually start

00:08:21,000 --> 00:08:23,000

a daily chart from there.

00:08:23,000 --> 00:08:29,000

So realize that as you work on smaller and smaller timeframes, you have to zoom in
and
00:08:29,000 --> 00:08:34,000
cover smaller periods of time, otherwise the complexity on the chart starts to
exceed the

00:08:34,000 --> 00:08:36,000

55 mono wave limit.

00:08:36,000 --> 00:08:42,000

So that's the reason why you keep moving to shorter and shorter timeframes because
as

00:08:42,000 --> 00:08:48,000

you move to a monthly chart starting here, it'll be possibly five times as
complicated.

00:08:48,000 --> 00:08:51,000

So you're going to be pushing that 55 mono wave limit.

00:08:51,000 --> 00:08:56,000

And when you go to weekly charts, it'll do it again and daily charts, it'll do it
again.

00:08:56,000 --> 00:09:01,000

So it's very important you're constantly controlling the amount of complexity on
the chart to

00:09:01,000 --> 00:09:05,000

arrive at good analysis.

00:09:05,000 --> 00:09:12,000

Once you've gone through this process and decided not only the timeframe, but
you've

00:09:12,000 --> 00:09:16,000

drawn your chart, the complexity of it is not too high and it's the largest time
frame

00:09:16,000 --> 00:09:19,000

you can work with and you've identified the low and the high, then you're going to
want

00:09:19,000 --> 00:09:23,000

to identify the proper turning points for each particular pattern.

00:09:23,000 --> 00:09:27,000

This is what these little dots on the chart are here for.

00:09:27,000 --> 00:09:31,000

And I use these dots because sometimes you have to move the dots around depending
on

00:09:31,000 --> 00:09:34,000

how the market behaves.

00:09:34,000 --> 00:09:40,000

We'll get into that with the rule of neutrality, which is covered in, I think, in a
few pages.

00:09:40,000 --> 00:09:47,000

Okay, so going back to what I mentioned earlier regarding scaling your charts, this
is done

00:09:47,000 --> 00:09:51,000

to always have the look and feel of your charts approximately the same because you
want to

00:09:51,000 --> 00:09:58,000

get used to certain kinds of patterns producing the same kind of behavior over and
over.

00:09:58,000 --> 00:10:02,000

That's only going to happen by number one, controlling complexity and controlling
the

00:10:02,000 --> 00:10:06,000

angle of the scent of the patterns that are forming.

00:10:06,000 --> 00:10:11,000

Again, if it's a trending pattern like this, you want it to go up at about a 45
degree

00:10:11,000 --> 00:10:13,000

angle.

00:10:13,000 --> 00:10:19,000

If it's a sideways action, you want it to go at about half of a square.

00:10:19,000 --> 00:10:22,000

So it's going sideways and not covering more than about half of a rectangle.

00:10:22,000 --> 00:10:25,000

I'm sorry, half of a square.

00:10:25,000 --> 00:10:31,000

So let's see, here's an example of a 45 degree angle for the trending phase and
then you

00:10:31,000 --> 00:10:34,000

have the corrective phase where the market's moving sideways for a while.

00:10:34,000 --> 00:10:40,000

You can see how this is diagrammed on a small scale here, the bigger advance here
and then

00:10:40,000 --> 00:10:42,000

more sideways action.

00:10:42,000 --> 00:10:46,000

So as you're breaking down your charts, you might have the larger pattern like this
and

00:10:46,000 --> 00:10:50,000

then you might start a smaller pattern on a monthly timeframe from this period.

00:10:50,000 --> 00:10:53,000

And then again, you might start a weekly chart from here and a daily chart from
there.
00:10:53,000 --> 00:10:58,000
And each time you're moving to your lower timeframe, you're controlling complexity,
you're making

00:10:58,000 --> 00:11:02,000

sure that the advancing moves are going at about a 45 degree angle.

00:11:02,000 --> 00:11:10,000

The corrective periods are only covering about half of a perfect square.

00:11:10,000 --> 00:11:12,000

And here is an example of some leeway.

00:11:12,000 --> 00:11:14,000

I mean, you just have to be a perfect square.

00:11:14,000 --> 00:11:17,000

It might end a little bit to the right, a little bit to the left.

00:11:17,000 --> 00:11:23,000

So there's a little bit of leeway in that process, but generally you want it to be
almost a perfect

00:11:23,000 --> 00:11:28,000

square from beginning to end by the time the pattern finishes.

00:11:28,000 --> 00:11:29,000

Here's some examples of that.

00:11:29,000 --> 00:11:32,000

So this one ends a little bit above.

00:11:32,000 --> 00:11:41,000

This one ends a little bit early, but it's basically a directional phase.

00:11:41,000 --> 00:11:46,000

Here shows where it's just happening too fast and you want to use your computer or
use

00:11:46,000 --> 00:11:52,000

your panda on charts and just readjust a little bit where you would move the
conclusion of

00:11:52,000 --> 00:11:57,000

this high to the right so it falls into this 25% range here.

00:11:57,000 --> 00:12:00,000

And again, this is not crucial long term.

00:12:00,000 --> 00:12:06,000

This is more for beginners to make sure that you're trying to get your charts to
look as

00:12:06,000 --> 00:12:12,000

close to the diagrams in my book and produce the same kind of behavior over and
over so

00:12:12,000 --> 00:12:18,000

you get used to what actually happens when a flat finishes or when a five-way move
finishes

00:12:18,000 --> 00:12:24,000

and it becomes a lot easier to trust what you see from a trading standpoint.

00:12:24,000 --> 00:12:31,000

This shows how a corrective period we've covered maybe half of the perfect square
instead

00:12:31,000 --> 00:12:34,000

of the full square.

00:12:34,000 --> 00:12:36,000

Same thing for this correction here.

00:12:36,000 --> 00:12:39,000

Okay, that's doing that there also.

00:12:39,000 --> 00:12:43,000

So now let's move on to the rule of neutrality and how we deal with the conclusion
of these

00:12:43,000 --> 00:12:46,000

dots that occur as you mark along chart.

00:12:46,000 --> 00:12:52,000

So to go into a lot of trouble to mark every single turn, these are only placed
when the

00:12:52,000 --> 00:12:54,000

market actually changes directions.

00:12:54,000 --> 00:13:00,000

So you wouldn't actually place it here first because the market's going up, it's
slow,

00:13:00,000 --> 00:13:03,000

but it's going up and it keeps going up and it's just moving faster.

00:13:03,000 --> 00:13:05,000

So this is not actually a turn.

00:13:05,000 --> 00:13:12,000

This is a point that needs to be considered for analysis purposes as the real
conclusion

00:13:12,000 --> 00:13:16,000

of the decline instead of this has to do with channeling.

00:13:16,000 --> 00:13:19,000

And because the market went mostly sideways, which you have to imagine, let's say
this

00:13:19,000 --> 00:13:22,000

is a weekly chart, what would have actually happened on a daily chart is it would
have

00:13:22,000 --> 00:13:29,000

bottomed here, bounced up, and then come back down and had a new weekly low that's
a little

00:13:29,000 --> 00:13:31,000

bit higher than this one.

00:13:31,000 --> 00:13:34,000

But when you're plotting weekly highs and lows in order, you're not going to see
that

00:13:34,000 --> 00:13:35,000

daily bounce.

00:13:35,000 --> 00:13:42,000

You may end up just seeing one week's low, the next week's low that's going to miss
that

00:13:42,000 --> 00:13:46,000

daily bounce before it came back down and then the day and then the weekly high.

00:13:46,000 --> 00:13:52,000

So stuff happened here that you can't see and you have to be aware of what this
means.

00:13:52,000 --> 00:13:55,000

And when you're channeling, you don't want to have a channel cutting through price
action

00:13:55,000 --> 00:13:57,000

like this.

00:13:57,000 --> 00:14:01,000

So using the rule of neutrality, you would look at this and notice that if the
chart is

00:14:01,000 --> 00:14:10,000

drawn properly at about a 45 degree angle for the advances that the sideways agar,
this

00:14:10,000 --> 00:14:16,000

period would become a sideways kind of plot and it wouldn't look like it's very
directional.

00:14:16,000 --> 00:14:22,000

So it would give you the option of moving your dot from here to here.

00:14:22,000 --> 00:14:27,000

And that's applying the rule of neutrality and realizing that this is probably the
real

00:14:27,000 --> 00:14:33,000

conclusion of whatever started at this high and it didn't technically end there but
it

00:14:33,000 --> 00:14:34,000

ended here.

00:14:34,000 --> 00:14:38,000

So you would move your after assessing this chart, it would move your dot from here
to
00:14:38,000 --> 00:14:39,000
here.

00:14:39,000 --> 00:14:43,000

And when you go to channel, you would have your channel touching this low and
touching

00:14:43,000 --> 00:14:46,000

this low and going up that direction.

00:14:46,000 --> 00:14:51,000

Now here's an example of a situation where you may or may not want to apply the
rule

00:14:51,000 --> 00:14:52,000

of neutrality.

00:14:52,000 --> 00:14:58,000

If you place a ruler on the chart or in your book, if you have one, you can see
that this

00:14:58,000 --> 00:15:01,000

bump right here did not actually touch a channel.

00:15:01,000 --> 00:15:07,000

If you draw a channel across this low and this low, this doesn't touch any channel
so

00:15:07,000 --> 00:15:13,000

it's not quite the same situation as this and it leads it open to potential
interpretation

00:15:13,000 --> 00:15:19,000

and it might better apply to Fibonacci relationships where if this is a five-rate
move, one, two,

00:15:19,000 --> 00:15:22,000

three, four, five, just pretend it's a five-rate move.

00:15:22,000 --> 00:15:27,000

If the five-rate move, then the relationship of wave three to wave one might
actually

00:15:27,000 --> 00:15:30,000

begin at this little bump instead of at the low.

00:15:30,000 --> 00:15:34,000

So you would measure the length of wave three potentially from here and compare it
to wave

00:15:34,000 --> 00:15:39,000

one and that might be where you're going to get a better read of what wave three is
doing

00:15:39,000 --> 00:15:42,000

or might do in the future if it hasn't finished yet.

00:15:42,000 --> 00:15:46,000

So that's the purpose of understanding these slightly neutral.

00:15:46,000 --> 00:15:53,000

This would be almost sort of an optional call in the analyst part to decide based
on future

00:15:53,000 --> 00:15:57,000

action Fibonacci relationships whether to use this point or use this one and based
on

00:15:57,000 --> 00:16:01,000

channeling but this one definitely would have to be moved because channeling would
force

00:16:01,000 --> 00:16:05,000

you to move your conclusion of this decline here.

00:16:05,000 --> 00:16:07,000

This would not be considered two monowaves.

00:16:07,000 --> 00:16:11,000

It would be considered one monowave ending right here and then the start of the
next

00:16:11,000 --> 00:16:12,000

one.

00:16:12,000 --> 00:16:19,000

The dot is marking the conclusion of one monowave sequence and then the start of
another one.

00:16:19,000 --> 00:16:25,000

If a market is going upward and has sideways action and then goes downward, most
often

00:16:25,000 --> 00:16:30,000

the conclusion of the uptrend is going to be here, not over here.

00:16:30,000 --> 00:16:34,000

And if it bottoms and reverses and goes up and the conclusion of the downtrend
would

00:16:34,000 --> 00:16:35,000

be considered here.

00:16:35,000 --> 00:16:40,000

Again, because if this is a weekly chart or even if it's a daily chart, intraday or
intrabar

00:16:40,000 --> 00:16:44,000

there would have been a bounce and then a drop back down to create this secondary
low

00:16:44,000 --> 00:16:49,000

which may or may not be lower but if it's higher by even one tick you would still
assume

00:16:49,000 --> 00:16:54,000

that the trend actually ended here that started up here.
00:16:54,000 --> 00:16:58,000
When you get directional action followed by sideways action followed by directional
action

00:16:58,000 --> 00:17:04,000

and this is actually not going down but it's maybe one tick or two ticks or more
higher

00:17:04,000 --> 00:17:09,000

so it's slowing down the uptrend but not stopping it.

00:17:09,000 --> 00:17:13,000

The angle of this will help to decide whether you pay attention to it or not.

00:17:13,000 --> 00:17:17,000

The steeper it is, the less important it is to worry about.

00:17:17,000 --> 00:17:22,000

The more sideways it is on a properly proportioned chart then the more you need to
consider it

00:17:22,000 --> 00:17:24,000

possibly a correction.

00:17:24,000 --> 00:17:29,000

So in this, either one of these scenarios, this could be a one, two, three or the
whole

00:17:29,000 --> 00:17:37,000

thing might just be wave one and based on before and after you would have to decide

00:17:37,000 --> 00:17:44,000

whether you're going to ignore this or use that to better facilitate your wave
count

00:17:44,000 --> 00:17:46,000

and solidify a good structure.

00:17:46,000 --> 00:17:50,000

Okay, let's move on.

00:17:50,000 --> 00:17:54,000

Here's some examples of how you can use it with a lot more specific detail.

00:17:54,000 --> 00:18:00,000

If your chart is properly proportioned and the angle is more than 45 degrees,
probably

00:18:00,000 --> 00:18:04,000

you're not going to count the lower point as the conclusion of the advance but
you'll

00:18:04,000 --> 00:18:07,000

just count the high as the conclusion.

00:18:07,000 --> 00:18:13,000

If it's above 45 degrees then you need to more seriously consider the point as the
end
00:18:13,000 --> 00:18:15,000
of the previous advance.

00:18:15,000 --> 00:18:18,000

She would move the dot from here to here or from there to there.

00:18:18,000 --> 00:18:22,000

But in this case I'll probably just keep the dot at the high.

00:18:22,000 --> 00:18:28,000

And this will be more useful later because if you move your dot then it's going to
change

00:18:28,000 --> 00:18:31,000

relationships and the length of moves and things like that.

00:18:31,000 --> 00:18:36,000

So it becomes, it has more use later on but initially it's just important to get
these

00:18:36,000 --> 00:18:40,000

turning points identified precisely so you know exactly where you're making your
measurements

00:18:40,000 --> 00:18:44,000

and how much retracement occurs after move starts.

00:18:44,000 --> 00:18:49,000

If you're starting from here, the retracement of 61% will be higher than if you
start from

00:18:49,000 --> 00:18:51,000

over here.

00:18:51,000 --> 00:18:53,000

Okay.

00:18:53,000 --> 00:18:59,000

Sorry, that's just some more examples of that.

00:18:59,000 --> 00:19:02,000

I'm not sure if the chart is going to mess up again.

00:19:02,000 --> 00:19:08,000

I may have to close the stupid application.

00:19:08,000 --> 00:19:10,000

Okay.

00:19:10,000 --> 00:19:13,000

Okay.

00:19:13,000 --> 00:19:15,000

I don't think there's much else to say there.

00:19:15,000 --> 00:19:18,000

If you have any questions you can type those in real quick.
00:19:18,000 --> 00:19:23,000
Or go to the next page I'm going in my actual physical book here and just referring
to my

00:19:23,000 --> 00:19:25,000

notes to make sure I'm not missing anything.

00:19:25,000 --> 00:19:33,000

Here's an example on page 913.

00:19:33,000 --> 00:19:34,000

Okay.

00:19:34,000 --> 00:19:36,000

Here you go.

00:19:36,000 --> 00:19:40,000

Here's some examples of how you might actually move your dots.

00:19:40,000 --> 00:19:45,000

In this case the angle of the set was more than 45 degrees so I kept the dot here.

00:19:45,000 --> 00:19:48,000

It was very, very low so I moved the dot to there.

00:19:48,000 --> 00:19:53,000

And here's a situation where you're going to have to determine using aspect to rule

00:19:53,000 --> 00:19:58,000

and neutrality and based on action before and after whether you're going to count
this

00:19:58,000 --> 00:19:59,000

or ignore it.

00:19:59,000 --> 00:20:03,000

And based on the possibility that a flat pattern may have started here.

00:20:03,000 --> 00:20:08,000

This could be wave A, ending here, wave B, and wave C.

00:20:08,000 --> 00:20:10,000

Sea waves and flatified wave moves.

00:20:10,000 --> 00:20:14,000

So I would suggest you probably would want to count this as wave 1 and wave 2, 3,
4, and

00:20:15,000 --> 00:20:16,000

4.

00:20:16,000 --> 00:20:19,000

But if for some reason you thought maybe you were in a triangle and this is wave A,
B,

00:20:19,000 --> 00:20:24,000

and C and you don't want to have a five wave move for wave C then you might end
wave C
00:20:24,000 --> 00:20:26,000
here and then wave D might start from this slope.

00:20:26,000 --> 00:20:31,000

So it depends on what the bigger structure is implying and you have some
flexibility when

00:20:31,000 --> 00:20:37,000

price action produces almost sideways action but it doesn't actually go against the
trend.

00:20:37,000 --> 00:20:38,000

Okay.

00:20:38,000 --> 00:20:42,000

So here is the net result of the analysis where all the dots are moved to their
proper place

00:20:42,000 --> 00:20:48,000

and this subjective possibility of determining using it one way or the other.

00:20:48,000 --> 00:20:54,000

And that's where we can then start the retracement observations which is where
chapter 3 gets

00:20:54,000 --> 00:20:56,000

very complicated.

00:20:56,000 --> 00:21:05,000

So to make wave 3, I mean chapter 3 a lot less complicated, you can start to look
at

00:21:05,000 --> 00:21:11,000

most action just from a perspective of whether it's impulsive or corrective and
during the

00:21:11,000 --> 00:21:16,000

corrective phase, how long does it last before it makes a new high or how long does

00:21:16,000 --> 00:21:18,000

it last before it makes a new low.

00:21:18,000 --> 00:21:26,000

So if you go through a very short-lived correction like it might be about the same
length of

00:21:26,000 --> 00:21:32,000

time as the advance or just a little bit more and it retraces less than 61% but
more than

00:21:32,000 --> 00:21:33,000

38.

00:21:33,000 --> 00:21:36,000

And that's strongly favorite is that this move would be impulsive.

00:21:36,000 --> 00:21:42,000

If the move takes a lot more time than the previous pattern, previous monowave in
this
00:21:42,000 --> 00:21:49,000
case, then it's far more likely that you're dealing with corrective activity
because impulsive

00:21:49,000 --> 00:21:54,000

action you don't want to have wave 2 take more than about 3 times a time of wave 1
and

00:21:54,000 --> 00:21:57,000

it needs to be more than 100 but less than about 300.

00:21:57,000 --> 00:22:01,000

So if it's more than 300 or less than 100 then you're dealing with corrective
action.

00:22:01,000 --> 00:22:05,000

So it's similar to the 38 to 61% range.

00:22:05,000 --> 00:22:10,000

In that 38 to 61 there's a strong chance you're dealing with an impulsive move.

00:22:10,000 --> 00:22:15,000

If it's more than 61 or less than 38 then the odds start to favor that the previous

00:22:15,000 --> 00:22:18,000

M1 in this case would be corrective.

00:22:18,000 --> 00:22:21,000

That also applies on a time basis.

00:22:21,000 --> 00:22:28,000

If the time is between 100 and 300% then it's more acceptable to assume this is
impulsive.

00:22:28,000 --> 00:22:33,000

If it's more than 300 or less than 100 then you have to assume this is corrective.

00:22:33,000 --> 00:22:39,000

So those are the primary dividing points for all patterns and it makes it easy if
you're

00:22:39,000 --> 00:22:44,000

going through your real time chart.

00:22:44,000 --> 00:22:48,000

Just apply those rules in a simple way that I just mentioned and you can start
placing

00:22:48,000 --> 00:22:53,000

3s and 5s quickly on all your different highs and lows.

00:22:53,000 --> 00:22:57,000

Of course placing them at the turning points if you've marked with those dots.

00:22:57,000 --> 00:23:04,000

Then once you have 10, 20, 30 of those in sequence then you can go back and start
looking
00:23:04,000 --> 00:23:05,000
from the very beginning of the chart.

00:23:05,000 --> 00:23:10,000

You want to start looking for identifiable sequences and those are discussed a
little

00:23:10,000 --> 00:23:13,000

bit more I think in chapter 4 and chapter 5.

00:23:13,000 --> 00:23:16,000

But some of you I'm sure already know that some of those identifiable sequences
would

00:23:16,000 --> 00:23:20,000

be like a 335 would constitute a flat.

00:23:20,000 --> 00:23:23,000

A 333 would be a triangle.

00:23:23,000 --> 00:23:26,000

53535 would be an impulsive pattern.

00:23:26,000 --> 00:23:33,000

So these markings what I call structure labels will help you to decide where the
sequences

00:23:33,000 --> 00:23:39,000

are and where you can begin one pattern and end that pattern and then you can look
at

00:23:39,000 --> 00:23:43,000

that beginning to end structure and decide does it follow the rules of a flat, does
it

00:23:43,000 --> 00:23:48,000

channel like a flat, does it have the relationships of a flat or whatever pattern
and whatever

00:23:48,000 --> 00:23:51,000

sequence that you've discovered.

00:23:51,000 --> 00:23:57,000

So using this process you can probably skip a great portion of what's discussed in
chapter

00:23:57,000 --> 00:24:04,000

3 and if you start your charts from the longest timeframe first and control
complexity, a

00:24:04,000 --> 00:24:07,000

vast part of chapter 3 will be unnecessary.

00:24:07,000 --> 00:24:14,000

When I wrote my book I was trying to, of course for 30 years ago I was trying to
allow someone

00:24:14,000 --> 00:24:19,000

to begin from the smallest timeframe and work their way up and that was a big
mistake because

00:24:19,000 --> 00:24:23,000

it made the process a lot more complicated than it needs to be but I didn't know it

00:24:23,000 --> 00:24:28,000

at the time because I hadn't had 30 years of experience when I wrote my book.

00:24:28,000 --> 00:24:32,000

So by starting from the largest timeframe and working your way down and controlling
complexity

00:24:32,000 --> 00:24:39,000

every time you create a new timeframe and a new chart that will dramatically reduce
the

00:24:39,000 --> 00:24:44,000

need for all the complexity of chapter 3 and all the discussions of chapter 3.

00:24:44,000 --> 00:24:51,000

And then regarding the most crucial structural identifiers which would be the L3 or
the

00:24:51,000 --> 00:24:56,000

L5, the L3 means it's the end of a correction and the L5 means it's the end of a
flat or

00:24:56,000 --> 00:25:02,000

impulsive pattern or zigzag, you can easily generally find those events just by
looking

00:25:02,000 --> 00:25:05,000

for violent price action on the market.

00:25:05,000 --> 00:25:11,000

Like for example, you see how this move is followed by a slower but larger decline.

00:25:11,000 --> 00:25:16,000

So there's no way this is an L5 or an L3 of anything, it can't be the last wave of
anything.

00:25:16,000 --> 00:25:23,000

So remember an L5 and an L3 denotes the very last three or the very last five of a
sequence.

00:25:23,000 --> 00:25:27,000

And when you finish the sequence you're going to want to have a violent price
action that

00:25:27,000 --> 00:25:34,000

retraces the last move in the same time or less, larger and faster typically.

00:25:34,000 --> 00:25:39,000

So if you're beginning the analysis on a chart the most important thing to start
looking

00:25:39,000 --> 00:25:45,000

for is what is the largest most violent move on the chart.
00:25:45,000 --> 00:25:51,000
And that large violent move with no exception will always be in the direction of
the trend

00:25:51,000 --> 00:25:52,000

of the structure you're dealing with.

00:25:52,000 --> 00:25:59,000

So that means it will either be wave 1, wave 3 or wave 5 of an impulsive pattern or
it

00:25:59,000 --> 00:26:06,000

will be wave A, wave C or wave E of a corrected pattern, it will not be anything
else.

00:26:06,000 --> 00:26:13,000

So that's a very important way to identify what's important on your chart and where

00:26:13,000 --> 00:26:15,000

you should begin the analysis.

00:26:15,000 --> 00:26:20,000

And I always start with the largest most violent point on the chart starting from
the largest

00:26:20,000 --> 00:26:26,000

time frame and that's where I begin either the wave A or wave 1 or wave 3 or wave 5
or

00:26:26,000 --> 00:26:33,000

wave C or wave E. It's got to be one of those six waves and based on what happens
around

00:26:33,000 --> 00:26:37,000

it and how major the top or the bottom was if it was a very long standing higher
low

00:26:37,000 --> 00:26:42,000

then you wouldn't assume it's going to be wave 3 or wave 5 or wave C or wave E. It

00:26:42,000 --> 00:26:48,000

would probably be wave 1 or wave A. So that's the way you should begin your
analysis.

00:26:48,000 --> 00:26:52,000

And if you do that it makes things a lot easier.

00:26:52,000 --> 00:26:59,000

So most of these highly complicated charts are not that necessary if you follow the
rules

00:26:59,000 --> 00:27:00,000

that I just mentioned.

00:27:00,000 --> 00:27:04,000

Let me look back in my book here.

00:27:04,000 --> 00:27:10,000

I'm going to skip most of the majority of chapter 3 now because that just goes into
00:27:10,000 --> 00:27:16,000
tremendous amounts of detail on all kinds of labeling processes and deciding
whether

00:27:16,000 --> 00:27:20,000

it's an F3 or an L3 or whatever.

00:27:20,000 --> 00:27:26,000

That stuff is not as important or not as critical to identify as long as you plot
your charts

00:27:26,000 --> 00:27:30,000

correctly and you look for violent price action because that violent price action
will

00:27:30,000 --> 00:27:33,000

generally be the beginning or the end of something important.

00:27:33,000 --> 00:27:37,000

And once you know that then it becomes a lot easier to begin placing structural
labels

00:27:37,000 --> 00:27:44,000

and even moving on to placing progress labels which would be 1, 2, 3, 4, 5 or A, B,
C.

00:27:44,000 --> 00:27:45,000

Okay.

00:27:45,000 --> 00:27:50,000

We're looking for the implementation of rule identity.

00:27:50,000 --> 00:27:53,000

Yes, I'm going to have to skip a ton of this stuff here.

00:27:53,000 --> 00:27:55,000

Give me one second.

00:27:56,000 --> 00:28:00,000

This just regards retracement.

00:28:00,000 --> 00:28:03,000

So you have your M1 here which is going up or down.

00:28:03,000 --> 00:28:04,000

It doesn't matter.

00:28:04,000 --> 00:28:08,000

And then you have your price action after.

00:28:08,000 --> 00:28:16,000

If it's somewhere between 0 and 1, that's a percent, I mean a multiplier.

00:28:16,000 --> 00:28:19,000

So you know, 100% of this or 161%.

00:28:20,000 --> 00:28:24,000

So again, that gets very complicated and tedious.
00:28:24,000 --> 00:28:28,000
And I don't really think it's not that necessary if you begin your analysis from
the large

00:28:28,000 --> 00:28:34,000

timeframe, control your complexity, draw your proportionalize your charts at the 45
degree

00:28:34,000 --> 00:28:35,000

angle and so forth.

00:28:35,000 --> 00:28:39,000

And all most of this becomes not that crucial anymore.

00:28:39,000 --> 00:28:42,000

I'm going to keep going here.

00:28:42,000 --> 00:28:48,000

We have a lot of pages to skip.

00:28:48,000 --> 00:28:52,000

And while I do this and try to find where we're going here because it's a lot of
pages

00:28:52,000 --> 00:28:54,000

I have to go through.

00:28:54,000 --> 00:28:59,000

How many of you, if you can answer in the chat section, got caught up on chapter 3
and

00:28:59,000 --> 00:29:04,000

sort of gave up on my book?

00:29:04,000 --> 00:29:13,000

Because that's from my experience where most people really get bogged down.

00:29:13,000 --> 00:29:16,000

They think this is supposed to read chapter 3.

00:29:16,000 --> 00:29:17,000

And it's not a chapter you read.

00:29:17,000 --> 00:29:22,000

It's a chapter strictly like a dictionary or an excite clippedia.

00:29:22,000 --> 00:29:27,000

You have a situation and you refer to that specific situation and only that
situation

00:29:27,000 --> 00:29:31,000

and only read the small little section that applies to it and you ignore all the
rest.

00:29:31,000 --> 00:29:35,000

But a lot of people try to read through it and there's warnings at the beginning of
chapter
00:29:35,000 --> 00:29:37,000
3 saying don't read it.

00:29:37,000 --> 00:29:43,000

Just focus on the conditions that apply on your real-time chart, find that in
chapter

00:29:43,000 --> 00:29:45,000

3 and then apply the rules.

00:29:45,000 --> 00:29:49,000

But a lot of people just miss that and they get caught up in it.

00:29:49,000 --> 00:29:52,000

Okay, Sarah's talks about the implementation of position indicators.

00:29:52,000 --> 00:29:59,000

These are the Ls and the Fs and the Ls like the first three, the first five, the
last

00:29:59,000 --> 00:30:00,000

three, the last five.

00:30:00,000 --> 00:30:05,000

Again that's going to be very easily identified strictly by looking for violent
price action

00:30:05,000 --> 00:30:07,000

on a chart.

00:30:07,000 --> 00:30:12,000

So it's not going to be very difficult to find.

00:30:12,000 --> 00:30:19,000

Largest fastest move on the chart will almost always be an L5, an F3, F5 or an L3.

00:30:19,000 --> 00:30:24,000

So it's one of those four and you just need to figure out based on the other
three's

00:30:24,000 --> 00:30:27,000

and the five's on your chart which one it happens to be.

00:30:27,000 --> 00:30:31,000

I don't want to go through any of this stuff.

00:30:31,000 --> 00:30:33,000

It's way too much complicated detail.

00:30:33,000 --> 00:30:36,000

It's not necessary.

00:30:36,000 --> 00:30:43,000

Okay, so let's talk about this search for violent price action.

00:30:43,000 --> 00:30:47,000

So you can see on this chart you can see the most violent moves have been occurring
to
00:30:47,000 --> 00:30:50,000
the downside until here.

00:30:50,000 --> 00:30:54,000

Now all of a sudden we have the most violent movement occurring to the upside.

00:30:54,000 --> 00:30:58,000

And this move is a lot bigger and faster than this move and even this move.

00:30:58,000 --> 00:31:02,000

So this not starting here which is where most people would start.

00:31:02,000 --> 00:31:07,000

They'd go one, two, one, two, that kind of thing, maybe three, four, five.

00:31:07,000 --> 00:31:12,000

When you're starting a new trend, the trend is not the first move of a new trend,
not

00:31:12,000 --> 00:31:15,000

a corrective pattern but the first move of a new trend will not be retraced more
than

00:31:15,000 --> 00:31:18,000

61% usually comfortably less than that.

00:31:18,000 --> 00:31:22,000

So you can see the rally off this low is slower than this decline.

00:31:22,000 --> 00:31:26,000

So that's warning number one that this is not a trendy move but it's a counter
trend

00:31:26,000 --> 00:31:28,000

move.

00:31:28,000 --> 00:31:31,000

This again is faster but not quite as big as this.

00:31:31,000 --> 00:31:34,000

Then you get a move that's slower and smaller than this.

00:31:34,000 --> 00:31:38,000

And then you get a move that's decently quick but it's smaller than this.

00:31:38,000 --> 00:31:42,000

And also then you get a violent upside move that's the biggest fastest that's been
seen

00:31:42,000 --> 00:31:43,000

in quite a while.

00:31:43,000 --> 00:31:48,000

So this is where you would begin your analysis not from here.

00:31:48,000 --> 00:31:53,000

Also you don't want a first wave to be retraced more than 61% so that would negate
the idea
00:31:53,000 --> 00:31:55,000
of this being a one two.

00:31:55,000 --> 00:31:57,000

And you're looking for violent price action.

00:31:57,000 --> 00:32:03,000

So the only two important parts, two important points on this chart would be this
high which

00:32:03,000 --> 00:32:09,000

produces the first largest fastest move and that in this case is an F3.

00:32:09,000 --> 00:32:15,000

And then you have this L3 which is because the next move up is so, well you know
that

00:32:15,000 --> 00:32:18,000

this can't be an impulsive pattern it's all sideways action.

00:32:18,000 --> 00:32:22,000

So we have to be an L3 so the last three of some kind of corrective sequence.

00:32:22,000 --> 00:32:27,000

And this begins your first most violent move up and it's not, well in this case it
should

00:32:27,000 --> 00:32:32,000

have been retraced a little bit more to be an official five wave move.

00:32:32,000 --> 00:32:38,000

A few of the diagrams in my book are not drawn quite as accurately as they should
be.

00:32:38,000 --> 00:32:41,000

It looks to me like that retracement is around 33%.

00:32:41,000 --> 00:32:43,000

It should have been a little bit more.

00:32:43,000 --> 00:32:48,000

See my one on your chart that to make this a almost confirmed five this should have
dropped

00:32:48,000 --> 00:32:52,000

a little bit more to maybe about right there.

00:32:52,000 --> 00:32:55,000

Otherwise it's possible this is a zigzag and this is an x-wave.

00:32:55,000 --> 00:33:01,000

So that's why the less than 38% retracement has become questionable and possibly
makes

00:33:01,000 --> 00:33:04,000

the previous move a corrective rally and this is just an x-wave followed by another
corrective

00:33:04,000 --> 00:33:05,000

rally.

00:33:05,000 --> 00:33:09,000

So if this is just a little bit bigger this would be a confirmed five wave move
followed

00:33:09,000 --> 00:33:13,000

by a confirmed correction and then another impulsive pattern after that.

00:33:13,000 --> 00:33:19,000

So again, plotting out your whole chart, going through all the dots and
identifications and

00:33:19,000 --> 00:33:21,000

rule of neutrality and all that stuff.

00:33:21,000 --> 00:33:26,000

Then you're going to be looking for the violent price action to determine the start
of something

00:33:26,000 --> 00:33:33,000

or the conclusion of an old pattern in the start of a new trend.

00:33:33,000 --> 00:33:34,000

Here's some is that the same chart?

00:33:34,000 --> 00:33:35,000

It looks like the same chart.

00:33:35,000 --> 00:33:36,000

Yes, the same chart.

00:33:36,000 --> 00:33:40,000

So it's talking about different ways of figuring out where you start the analysis.

00:33:40,000 --> 00:33:44,000

You want to definitely make sure to read this section.

00:33:44,000 --> 00:33:47,000

It's very important to understand where you begin your analysis.

00:33:47,000 --> 00:33:54,000

Another way to figure out where to start your analysis is if you measure any amount

00:33:54,000 --> 00:33:59,000

of time on a chart from some high to some low and you take that square and
duplicate

00:33:59,000 --> 00:34:05,000

it moving it forward, if the market hasn't retraced the previous move in that same
amount

00:34:05,000 --> 00:34:06,000

of time or less.

00:34:06,000 --> 00:34:12,000

So if you draw a square from here to here and you duplicate it forward, let me
figure out
00:34:12,000 --> 00:34:14,000
whether that would be home.

00:34:15,000 --> 00:34:21,000

Okay, so that would be right around over here.

00:34:21,000 --> 00:34:27,000

So if the market hasn't exceeded this starting point in that same amount of time or
less,

00:34:27,000 --> 00:34:31,000

then this is not the proper place to begin your analysis.

00:34:31,000 --> 00:34:35,000

There is a video on our website discussing this.

00:34:35,000 --> 00:34:39,000

This was back about 20, 30 years ago when I was a lot younger.

00:34:39,000 --> 00:34:42,000

Let me pull that up if I can find it real quick.

00:34:42,000 --> 00:34:49,000

Under the education section, let's see video workshops.

00:34:49,000 --> 00:34:50,000

And yeah, there they are.

00:34:50,000 --> 00:34:55,000

Okay, so I'm going to go ahead and copy this and paste it over into our little
session.

00:34:55,000 --> 00:35:00,000

Okay, in the chat section, I'm pacing it right now.

00:35:00,000 --> 00:35:02,000

Hopefully that link works.

00:35:02,000 --> 00:35:07,000

So that you can go and watch those videos there and it talks about various
different

00:35:07,000 --> 00:35:12,000

things, complexity of charts, starting your charts at the right place and so forth.

00:35:12,000 --> 00:35:16,000

So one of those techniques is just measuring any period of time from some high to
some

00:35:16,000 --> 00:35:17,000

low.

00:35:17,000 --> 00:35:20,000

And if the market hasn't retraced that whole move and that amount of time or less,
then

00:35:20,000 --> 00:35:22,000

this can't be the start of the trend.
00:35:22,000 --> 00:35:23,000
And you would do it again.

00:35:23,000 --> 00:35:28,000

You would reanalyze and move your analysis to here and move it to there.

00:35:28,000 --> 00:35:32,000

And eventually it needs to retrace that whole time frame in the same amount of time
or less,

00:35:32,000 --> 00:35:34,000

otherwise you're starting your account from the wrong place.

00:35:34,000 --> 00:35:38,000

And that you didn't start a new trend from here and probably not there, but this is
where

00:35:38,000 --> 00:35:43,000

it began because we finally had a real trendy violent counter-trend move.

00:35:43,000 --> 00:35:51,000

Okay, so let's move on to the next chart.

00:35:51,000 --> 00:35:58,000

Now when you're dealing with smaller patterns inside of bigger patterns, this is
discussing

00:35:58,000 --> 00:36:02,000

that process where you might have had a five, three, five, and again, this
retracement should

00:36:02,000 --> 00:36:06,000

have been a little bit more, but five, three, five, zigzag.

00:36:06,000 --> 00:36:11,000

Once that zigzag is done, then you can compress that and create a singular,
correct,

00:36:11,000 --> 00:36:13,000

what the hell is going on with my phone?

00:36:13,000 --> 00:36:20,000

Well, I got to turn off these, along that are going off on my computer.

00:36:20,000 --> 00:36:24,000

Okay.

00:36:24,000 --> 00:36:29,000

So you can compress the correct patterns to produce a larger, similar degree
pattern.

00:36:29,000 --> 00:36:33,000

We'll get into the rule of similarity and balance in chapter four.

00:36:33,000 --> 00:36:37,000

But this would still be considered a same degree structure because it's similar in

00:36:37,000 --> 00:36:38,000

price to a previous move.
00:36:38,000 --> 00:36:44,000
It's not a lot more complicated, so it falls into the similarity rule that will be
discussed

00:36:44,000 --> 00:36:46,000

in chapter four.

00:36:46,000 --> 00:36:50,000

But this compaction process then allows you to identify a larger structure, which
in this

00:36:50,000 --> 00:36:52,000

case would be a flat.

00:36:52,000 --> 00:36:59,000

And after the seaway here, which would be marked as an L5, only after you see the
market

00:36:59,000 --> 00:37:05,000

produces violent counter-trend move that's larger and faster than this seaway of
that

00:37:05,000 --> 00:37:06,000

flat.

00:37:06,000 --> 00:37:11,000

It's that kind of price action that tells you something old is finished, something
new

00:37:11,000 --> 00:37:14,000

is started, which would make this an L5 or an L3.

00:37:14,000 --> 00:37:18,000

If it was an L3, it would have to be, you know, some situation in which the
structure

00:37:18,000 --> 00:37:23,000

allowed it to be a three instead of a five, so maybe a triangle or some kind of
complicated

00:37:23,000 --> 00:37:24,000

correction.

00:37:24,000 --> 00:37:26,000

But in this case, it makes sense.

00:37:26,000 --> 00:37:31,000

It has the look of a flat, it has the design of a flat, it has the behavior, you
know,

00:37:31,000 --> 00:37:36,000

post-behavior action of a flat, where waist C is completely retraced in the same
amount

00:37:36,000 --> 00:37:39,000

of time or less, and the move is actually larger.

00:37:39,000 --> 00:37:44,000

So this is the kind of violent price action you're looking for to identify those
L5s or

00:37:44,000 --> 00:37:45,000

L3s.

00:37:45,000 --> 00:37:50,000

And if it's the first violent move of a sequence and the trend doesn't come in, so
in this

00:37:50,000 --> 00:37:54,000

case it drops, it doesn't get back above this high and it doesn't do it quicker,
and then

00:37:54,000 --> 00:37:58,000

it starts making more new lows, and that would more likely be the first three or
the

00:37:58,000 --> 00:38:02,000

first five instead of the L3 or the L5.

00:38:02,000 --> 00:38:03,000

Okay.

00:38:03,000 --> 00:38:11,000

Let's tell them about some special circumstances.

00:38:11,000 --> 00:38:19,000

I don't think that's very important for this purpose.

00:38:19,000 --> 00:38:24,000

So we're a little bit ahead of schedule.

00:38:24,000 --> 00:38:29,000

I had a question that came in an email and y'all can send some questions in while
I'm

00:38:29,000 --> 00:38:32,000

going through this real quick, but let me get to that question.

00:38:32,000 --> 00:38:34,000

Something to do with a market, I think.

00:38:34,000 --> 00:38:42,000

I know we don't go through actual market analysis in the introductory class, but
let's see

00:38:42,000 --> 00:38:43,000

Laul.

00:38:43,000 --> 00:38:46,000

Let me see if you're in the class right now.

00:38:47,000 --> 00:38:51,000

Okay, long and unlock your mic.

00:38:51,000 --> 00:38:57,000

So specifically you're asking about a goal counter.
00:38:57,000 --> 00:38:58,000
Wow.

00:38:58,000 --> 00:39:08,000

Yeah, I'm looking at wave A and B on like the six month for gold on the Excel.

00:39:08,000 --> 00:39:14,000

Are these charts that we sent that we created through our Excel service?

00:39:14,000 --> 00:39:15,000

Yes.

00:39:15,000 --> 00:39:22,000

So you're looking at the six monthly gold?

00:39:22,000 --> 00:39:25,000

Yeah.

00:39:25,000 --> 00:39:39,000

And then I'm curious on the measurement of A and B to determine if they've
completed.

00:39:39,000 --> 00:39:42,000

So which one of these charts are we talking about?

00:39:42,000 --> 00:39:52,000

I think the one where it doesn't have C yet on it, it may be the yearly.

00:39:52,000 --> 00:39:56,000

Oh, this one right here.

00:39:56,000 --> 00:39:58,000

Yeah, that one there.

00:39:58,000 --> 00:40:00,000

Okay, so what about it?

00:40:00,000 --> 00:40:09,000

So assuming that if A is correct, then what would be the left of time that B would
run?

00:40:09,000 --> 00:40:15,000

And I think from the cheat sheet, you draw the square from A and then put that over

00:40:15,000 --> 00:40:16,000

to B.

00:40:16,000 --> 00:40:19,000

And there's an example of that.

00:40:19,000 --> 00:40:22,000

So this is a log scale because it's covering so much price territory.

00:40:22,000 --> 00:40:24,000

This is the only proper way to draw this chart.

00:40:24,000 --> 00:40:29,000

You see, I've measured the time of wave A. I've duplicated.
00:40:29,000 --> 00:40:32,000
That's the minimum time for wave B and we just reached it.

00:40:32,000 --> 00:40:37,000

So now we've reached the minimum time for B. It could last up to two or three times
along

00:40:37,000 --> 00:40:40,000

very easily, but at least we've reached the minimum.

00:40:40,000 --> 00:40:43,000

So we can consider this as a more normal correction.

00:40:43,000 --> 00:40:44,000

We're not dealing with triangles.

00:40:44,000 --> 00:40:46,000

We're not dealing with anything bizarre.

00:40:46,000 --> 00:40:52,000

So it's just a typical flat, maybe a triangle, but more like a typical flat kind of
correction.

00:40:52,000 --> 00:40:55,000

If it was a triangle, wave A would be more violent.

00:40:55,000 --> 00:40:56,000

It's not very violent at all.

00:40:56,000 --> 00:41:02,000

So this looks like we're just in a flat or we're in some kind of larger complex
correct

00:41:02,000 --> 00:41:07,000

to decline to eventually get us down below 600.

00:41:07,000 --> 00:41:12,000

So it could get an ABC and then the next way and another ABC to eventually work our
way

00:41:12,000 --> 00:41:15,000

down to below the top of wave one.

00:41:15,000 --> 00:41:17,000

So that question?

00:41:17,000 --> 00:41:20,000

Yes, yes, okay.

00:41:20,000 --> 00:41:23,000

There any other part of that question?

00:41:23,000 --> 00:41:26,000

Is that the whole question?

00:41:26,000 --> 00:41:31,000

Just the technique of drawing your squares and then moving them over.

00:41:31,000 --> 00:41:34,000

That may be more of an Excel question though.

00:41:34,000 --> 00:41:38,000

Well, as far as how I get them on the chart?

00:41:38,000 --> 00:41:39,000

Yeah.

00:41:39,000 --> 00:41:44,000

Just go up under insert, go into shapes and select whatever you want.

00:41:44,000 --> 00:41:48,000

Select a rectangle, hold down your shift key and it'll make a perfect square.

00:41:48,000 --> 00:41:51,000

If you don't hold down your shift key, it'll make a rectangle.

00:41:51,000 --> 00:41:55,000

So if you don't hold a shift key down, you can make it any shape you want to.

00:41:55,000 --> 00:41:58,000

But if you do, it'll make it a perfect square.

00:41:58,000 --> 00:41:59,000

Okay.

00:41:59,000 --> 00:42:00,000

Okay.

00:42:00,000 --> 00:42:01,000

All right.

00:42:01,000 --> 00:42:02,000

Okay.

00:42:02,000 --> 00:42:05,000

So that's it for the emailed questions.

00:42:05,000 --> 00:42:07,000

I'm going to go ahead and delete that.

00:42:07,000 --> 00:42:10,000

Anyone else has sent any questions in?

00:42:10,000 --> 00:42:14,000

I don't allow, can you put your mic on mute?

00:42:14,000 --> 00:42:15,000

Okay.

00:42:15,000 --> 00:42:19,000

So I don't see any other questions that have come in.

00:42:19,000 --> 00:42:22,000

I don't see anybody asking any questions, but I find it a little unusual because
chapter

00:42:22,000 --> 00:42:26,000

three is quite a complicated chapter, at least originally wrote it.
00:42:26,000 --> 00:42:27,000
Let's see.

00:42:27,000 --> 00:42:29,000

Oh, I do have some questions here.

00:42:29,000 --> 00:42:30,000

Sorry.

00:42:30,000 --> 00:42:31,000

I wasn't noticing them.

00:42:31,000 --> 00:42:32,000

I was looking at the chat section.

00:42:32,000 --> 00:42:34,000

Chat rooms, the question.

00:42:34,000 --> 00:42:35,000

Okay.

00:42:35,000 --> 00:42:38,000

So, Panchai says I have sent an email.

00:42:38,000 --> 00:42:39,000

Okay.

00:42:39,000 --> 00:42:40,000

So we've already gone.

00:42:40,000 --> 00:42:42,000

Did we go through that?

00:42:42,000 --> 00:42:43,000

Let's see.

00:42:43,000 --> 00:42:46,000

Panchai, I think your question was about NRT.

00:42:46,000 --> 00:42:47,000

Oh, no, it's not.

00:42:47,000 --> 00:42:48,000

Okay.

00:42:48,000 --> 00:42:49,000

Hold on.

00:42:49,000 --> 00:42:50,000

Let me move that to the waste section.

00:42:50,000 --> 00:42:51,000

Okay.

00:42:51,000 --> 00:42:54,000

You must be in two classes.

00:42:54,000 --> 00:43:01,000

So let me go ahead and open up your microphone.

00:43:01,000 --> 00:43:02,000

Okay.

00:43:02,000 --> 00:43:08,000

Panchai, I've unlocked your microphone.

00:43:08,000 --> 00:43:15,000

So you want me to go and open up your email?

00:43:15,000 --> 00:43:18,000

I'm going to have a question about the Excel.

00:43:18,000 --> 00:43:22,000

How you can use people in cheating Excel.

00:43:22,000 --> 00:43:27,000

How you can use the retestment.

00:43:27,000 --> 00:43:31,000

How you can use the retestment.

00:43:31,000 --> 00:43:32,000

Okay.

00:43:32,000 --> 00:43:34,000

Let me open up the chart that you sent.

00:43:34,000 --> 00:43:40,000

Don't see anything opening.

00:43:40,000 --> 00:43:41,000

It might not allow it.

00:43:41,000 --> 00:43:45,000

There may be some kind of block.

00:43:45,000 --> 00:43:51,000

I don't think it's what's on your chart.

00:43:51,000 --> 00:43:55,000

Let me see if I can open it on my Mac and get an idea what it is.

00:43:55,000 --> 00:44:00,000

It's a chart that I used your method to create it.

00:44:00,000 --> 00:44:01,000

Okay.

00:44:01,000 --> 00:44:07,000

I'm going to look at it on my Mac and see if I can maybe take a picture.

00:44:08,000 --> 00:44:11,000

Let's see.

00:44:11,000 --> 00:44:15,000

Okay.
00:44:15,000 --> 00:44:17,000
And which market is this?

00:44:17,000 --> 00:44:21,000

It's stock market in my country.

00:44:21,000 --> 00:44:22,000

Okay.

00:44:22,000 --> 00:44:23,000

Let's see.

00:44:23,000 --> 00:44:31,000

I'm going to probably take a picture of it and send it over to the Windows
environment

00:44:31,000 --> 00:44:34,000

so that we can look at it there.

00:44:35,000 --> 00:44:39,000

I'm just trying to get the right proportions here so it looks good.

00:44:39,000 --> 00:44:40,000

Okay.

00:44:40,000 --> 00:44:45,000

I'm going to stress the chart up a little bit.

00:44:45,000 --> 00:44:46,000

Okay.

00:44:46,000 --> 00:44:47,000

Okay.

00:44:47,000 --> 00:44:53,000

Let me take a picture of this real quick and I'm going to move it over to the
Windows environment.

00:44:53,000 --> 00:44:59,000

It opened on my Mac but it just wouldn't open in my Windows.

00:44:59,000 --> 00:45:03,000

Okay.

00:45:04,000 --> 00:45:13,000

I almost have it done here.

00:45:13,000 --> 00:45:15,000

Okay.

00:45:15,000 --> 00:45:21,000

So let's go ahead and open up that chart.

00:45:21,000 --> 00:45:23,000

Okay.

00:45:23,000 --> 00:45:27,000

So there's your chart.
00:45:27,000 --> 00:45:30,000
So what about this?

00:45:30,000 --> 00:45:33,000

That's by the way, this chart is way more than 55 monoways.

00:45:33,000 --> 00:45:35,000

So that's mistake number one.

00:45:35,000 --> 00:45:41,000

So for example, it's in the sheet.

00:45:41,000 --> 00:45:44,000

It's in the sheet two on the Excel.

00:45:44,000 --> 00:45:48,000

Five, three, yellow.

00:45:48,000 --> 00:45:49,000

Okay.

00:45:49,000 --> 00:45:51,000

Well, I don't have to go back and redo all this stuff again.

00:45:51,000 --> 00:45:58,000

But as far as analyzing a chart like this, first thing you want to do is you can
see this is all your data is six monthly chart.

00:45:58,000 --> 00:46:03,000

So you have a major low here, but it's not going to be that crucial to figuring out
what's going on.

00:46:03,000 --> 00:46:16,000

Not going to be that crucial to figure out what's going on on this chart because
whatever's going on, the more important event probably began with this violent
decline here.

00:46:16,000 --> 00:46:20,000

This is the largest, fastest move.

00:46:20,000 --> 00:46:22,000

Sorry.

00:46:23,000 --> 00:46:26,000

On this chart in quite some time.

00:46:26,000 --> 00:46:30,000

So I would probably begin the assessment of what's happening here.

00:46:30,000 --> 00:46:33,000

And it looks like even that might be too many monoways.

00:46:33,000 --> 00:46:39,000

So the next thing I do is have to find the next most important point to start this
analysis.

00:46:39,000 --> 00:46:44,000

And it would probably be from right here.
00:46:45,000 --> 00:46:46,000
Possibly this.

00:46:46,000 --> 00:46:49,000

This is a strange behavior because it's a very violent drop.

00:46:49,000 --> 00:46:52,000

Then it gets completely retraced with a slower advance.

00:46:52,000 --> 00:46:55,000

So it makes this look very strange right in here.

00:46:58,000 --> 00:47:03,000

This might be a very difficult market to figure out what's going on because we're
dealing with highly complicated corrective action.

00:47:04,000 --> 00:47:09,000

And it might take some time.

00:47:09,000 --> 00:47:16,000

You probably should go to a two and a half year chart first to simplify this data
and start back at the beginning.

00:47:16,000 --> 00:47:20,000

And once we have that, then maybe we can start to piece together what happened.

00:47:20,000 --> 00:47:26,000

This starts getting a little too complicated and none of the starting points that
we might use seem to be that.

00:47:27,000 --> 00:47:32,000

If I was forced to guess, I would say this is way they have a huge corrective
environment.

00:47:32,000 --> 00:47:35,000

This whole rally is way B, but it's not finished.

00:47:35,000 --> 00:47:39,000

And we won't know when it's going to finish until we get a violent down move.

00:47:39,000 --> 00:47:46,000

And that would be the end of way B and the start of a very prolonged multi-year
corrective C-way decline.

00:47:46,000 --> 00:47:50,000

That would be my quick first guess based on the behavior that I see.

00:47:51,000 --> 00:48:01,000

And I don't know if that answers your question or not, but you have to control
complexity to do good web analysis and this chart is too complicated.

00:48:01,000 --> 00:48:08,000

Okay. So if you try to read any chance you could do a two and a half year chart and
send it to me for next class.

00:48:08,000 --> 00:48:10,000

Well, I do it for you.

00:48:10,000 --> 00:48:11,000

Three years.

00:48:11,000 --> 00:48:15,000

Okay. Perfect. So if you can see the three year chart.

00:48:16,000 --> 00:48:21,000

And start a three year chart at this low and we can take a look at that next time.

00:48:21,000 --> 00:48:24,000

Okay. Okay.

00:48:24,000 --> 00:48:28,000

Okay. So let's close that and go to the next question.

00:48:28,000 --> 00:48:31,000

Yeah.

00:48:31,000 --> 00:48:32,000

Yeah.

00:48:33,000 --> 00:48:53,000

So I was trying to have my book pretend or played a part of a real time instructor
like you were taking my class and I was there holding your hand and telling you
exactly what.

00:48:54,000 --> 00:48:55,000

Okay.

00:48:55,000 --> 00:49:05,000

And so I was trying to get a little bit of a way and how to do all the analysis,
but because I wasn't there, I had to consider every imaginable possibility that a
market could produce on a chart.

00:49:05,000 --> 00:49:08,000

And that's what made chapter three so complicated.

00:49:08,000 --> 00:49:10,000

Okay.

00:49:10,000 --> 00:49:14,000

And see, Hamid says, I skipped most of chapter three for continue.

00:49:14,000 --> 00:49:15,000

Yeah.

00:49:15,000 --> 00:49:22,000

So again, most people get bogged down and most people give up around chapter three,
but as good as you continue.

00:49:22,000 --> 00:49:31,000

So I'm saying that's too complicated. So the difference between XC three and F
three is the retracement that the C is lower.

00:49:31,000 --> 00:49:33,000

I'm not quite understanding this correction.

00:49:33,000 --> 00:49:45,000

Question. So I'm going to unlock your mic. This is a con jahan. I'm just guessing
on how to pronounce your name.
00:49:46,000 --> 00:49:53,000
Okay. So what's your question? Yeah, it's bigger three three one in your book.

00:49:53,000 --> 00:49:55,000

Okay.

00:49:55,000 --> 00:50:01,000

Let me see three one. I'm just going to have to go back and look at that real
quick. See if I can find it.

00:50:01,000 --> 00:50:05,000

Figure three one. What page is that?

00:50:05,000 --> 00:50:12,000

Give me a second.

00:50:12,000 --> 00:50:14,000

I must be very early.

00:50:14,000 --> 00:50:16,000

The page that we just,

00:50:16,000 --> 00:50:23,000

Oh, no, this is the age one.

00:50:23,000 --> 00:50:25,000

Oh, what's the wrong thing? Hold on.

00:50:25,000 --> 00:50:32,000

I'm going to go about this.

00:50:32,000 --> 00:50:45,000

Let me.

00:50:45,000 --> 00:50:48,000

You don't have this diagram.

00:50:48,000 --> 00:50:57,000

That's no diagram on your note. Three three one three one. Oh, so that's way far
along. Okay.

00:50:57,000 --> 00:51:08,000

Around what page is on.

00:51:08,000 --> 00:51:17,000

The pages are at the bottom of the book.

00:51:18,000 --> 00:51:24,000

I can find 65. I'm not sure. Okay. Okay.

00:51:24,000 --> 00:51:30,000

It's a far distance. It's not inside the complicated part. Right. It's toward the
end.

00:51:30,000 --> 00:51:33,000

Yes, what the pattern isolation procedure.

00:51:33,000 --> 00:51:36,000

That headline.

00:51:36,000 --> 00:51:41,000

Almost at the end that you said the trend started last three.

00:51:41,000 --> 00:51:44,000

The flat from the flat following with.

00:51:45,000 --> 00:51:49,000

Yeah, that's one. Okay. So what about it?

00:51:49,000 --> 00:51:54,000

You see the X three three after.

00:51:54,000 --> 00:51:56,000

Yeah, that part.

00:51:56,000 --> 00:51:58,000

How can you identify with.

00:51:58,000 --> 00:52:03,000

S three or X three three.

00:52:03,000 --> 00:52:06,000

Here. Yeah. No.

00:52:06,000 --> 00:52:09,000

After the five.

00:52:10,000 --> 00:52:12,000

Yeah.

00:52:12,000 --> 00:52:18,000

So how do I identify this? Yeah, this and the first three at the end.

00:52:18,000 --> 00:52:20,000

Between.

00:52:20,000 --> 00:52:23,000

Yeah, between those two.

00:52:23,000 --> 00:52:31,000

Okay. Why? I mean, this, this goes to a lot of discussion in the book discussing
probably how these labels were placed on the chart.

00:52:31,000 --> 00:52:35,000

So you would, I recommend you reread that section.

00:52:36,000 --> 00:52:41,000

I was weird. It just crashed. Hold on a second. I got to reopen that.

00:52:41,000 --> 00:52:48,000

You have to reread that section of how I got to that point. I'm not really.

00:52:48,000 --> 00:53:04,000

Not really sure of the discussion that I had has been 30 years since I wrote the
book, but when you're going through a series of patterns, if you have the structure
of a flat and it channels like a flat has proper relationships with the flat is the
proper timing of a flat.
00:53:04,000 --> 00:53:15,000
Then you can solidify that as a flat. So this is a flat and the retracement of that
flat is less than 61% by definition. It would have to be an ex wave followed by
another correction.

00:53:15,000 --> 00:53:23,000

So even though this is actually too tiny to be a legitimately good ex wave, it
should have been more complicated and more time consuming.

00:53:23,000 --> 00:53:30,000

Again, this is due to the fact that I wrote my book 30 years ago and I didn't
realize a lot of things that I now realize.

00:53:31,000 --> 00:53:43,000

But if you want to mark on your chart, this should have been probably about three
monoways and taken about a third of the time of the previous pattern and a third of
the complexity and a third of the price to qualify as a good ex wave.

00:53:43,000 --> 00:53:48,000

So this would really be substandard and probably not a legitimate ex wave because
it's a little too tiny.

00:53:48,000 --> 00:53:55,000

But if it had taken a little more time, we'd take a little bit more, a little more
complexity than now would have made for a good ex wave.

00:53:55,000 --> 00:54:03,000

And if the flat pattern follows all the rules and it doesn't get retraced enough,
then by definition, it would have to be an ex wave.

00:54:03,000 --> 00:54:09,000

So I can't tell you exactly the logic I went through in the book because it's been
too long since I've written it.

00:54:09,000 --> 00:54:17,000

But I can tell you now that would be the process that I would go through in my mind
that this is a good structured looking flap.

00:54:18,000 --> 00:54:28,000

This doesn't retrace enough. This is like a good contracting triangle. So this is
the only thing separating a good flat from a good triangle, which would make that
an ex wave.

00:54:28,000 --> 00:54:32,000

I make time. I will read your book first.

00:54:32,000 --> 00:54:38,000

Okay, let me go to the next question. So go ahead and put your mic on mute.

00:54:39,000 --> 00:54:46,000

Okay, so it says my six monthly chart shows the fifth wave that extension only see
three ways.

00:54:46,000 --> 00:54:51,000

So let me pull up that chart.

00:54:57,000 --> 00:54:58,000

So this is how I'm in.
00:54:58,000 --> 00:55:02,000
So I'm unmuting your mic.

00:55:02,000 --> 00:55:05,000

So you're talking about the structure here.

00:55:06,000 --> 00:55:12,000

Yeah, so you know from the fourth wave of the larger three way.

00:55:12,000 --> 00:55:13,000

Right.

00:55:13,000 --> 00:55:25,000

You've got one, two, three, but then you've got it's curving up the last, you know,
the last minute.

00:55:26,000 --> 00:55:36,000

So the reason that you can do this is for the reasons that are mentioned earlier in
the book, when you have a pattern that retraces such a tiny amount like this.

00:55:36,000 --> 00:55:54,000

That means there's hidden structure you can't see over here. So either this is a
zigzag and ex wave and another zigzag or you have a five wave move and this has to
be a five wave move where you maybe had a one, two, three, four, five, or you had a
one, two, three, four, and five that you can't see hidden.

00:55:54,000 --> 00:55:59,000

So you have two patterns near each other like this. It means the market actually
declined and went back up.

00:55:59,000 --> 00:56:02,000

So you might have had a one, two, three, four, and five.

00:56:02,000 --> 00:56:05,000

Again, though you could have had a two wave missing down here.

00:56:05,000 --> 00:56:10,000

This does not retrace enough of this move to confirm this is a five wave move.

00:56:10,000 --> 00:56:23,000

So it could be either correct a pattern or a one, two, three that you can't see or,
which is probably the way I would interpret this because if you have a fifth wave
extension, most likely the fifth wave of the fifth wave will be the extension
instead of the first wave.

00:56:23,000 --> 00:56:29,000

So if I were to guess I would have seen this is a one, two, three up to this point
with a missing structure in here.

00:56:29,000 --> 00:56:32,000

This is the fourth wave and this is the fifth wave extension.

00:56:32,000 --> 00:56:34,000

Does that make sense to you?

00:56:34,000 --> 00:56:40,000

I saw you saying that it's a it's not a confirmed fifth wave.
00:56:40,000 --> 00:56:41,000
Fifth wave.

00:56:41,000 --> 00:56:44,000

We can't see on this chart because there's not enough detail.

00:56:44,000 --> 00:56:49,000

This is the big picture super simplified two and a half of your chart.

00:56:49,000 --> 00:56:56,000

So then you would have to go to a smaller timeframe to start getting an idea that I
had that, I guess I don't.

00:56:56,000 --> 00:57:11,000

Small timeframe to analyze this to see if it really is a five wave move, but based
on all surrounding price behavior and evidence, we have a very good one through
three situation where one and three are very similar.

00:57:11,000 --> 00:57:18,000

The fifth wave is about a hundred and sixty one percent or more of the next longest
wave, fourth wave and the two wave clearly don't overlap.

00:57:18,000 --> 00:57:19,000

They alternate.

00:57:19,000 --> 00:57:30,000

It's a very simplistic structure because one is a single data point, two is a
single data point, three is a single data point, which allows for very strange kind
of behavior sometimes where you're missing price action.

00:57:30,000 --> 00:57:32,000

But I used to have the detailed version.

00:57:32,000 --> 00:57:33,000

I'm not sure what happened to it.

00:57:33,000 --> 00:57:40,000

Let me see if I have a monthly chart that shows more detail.

00:57:40,000 --> 00:57:49,000

I think the monthly chart gets way too complicated.

00:57:49,000 --> 00:57:50,000

I don't even have it going.

00:57:50,000 --> 00:57:55,000

I got rid of all those time frames because the company look at the complexity of
this chart.

00:57:55,000 --> 00:57:57,000

This is just going back to 2008.

00:57:57,000 --> 00:58:01,000

It doesn't go back down to 1982.

00:58:01,000 --> 00:58:03,000

So the complexity of the chart we just mastered.

00:58:03,000 --> 00:58:04,000

So I just gave up on it.

00:58:04,000 --> 00:58:05,000

I don't even use it anymore.

00:58:05,000 --> 00:58:24,000

But I can assure you that that particular move that you're talking about became a
five wave move on monthly charts in real time and made sense on monthly charts
where it looked a little strange on the six on the two and a half of your chart
because of missing price action and because of simplification of data.

00:58:24,000 --> 00:58:25,000

Does that make sense?

00:58:26,000 --> 00:58:28,000

Yeah, that makes perfect transfer.

00:58:28,000 --> 00:58:36,000

Just a quick one on the last chart that you had with the sea wave ending quite
higher road.

00:58:36,000 --> 00:58:39,000

And monthly SMP or six monthly.

00:58:39,000 --> 00:58:40,000

I think it was a six.

00:58:40,000 --> 00:58:42,000

I think it was a monthly SMP.

00:58:42,000 --> 00:58:49,000

Right.

00:58:49,000 --> 00:58:53,000

Right.

00:58:53,000 --> 00:58:56,000

This is an equal triangle structure.

00:58:56,000 --> 00:58:58,000

Okay.

00:58:58,000 --> 00:58:59,000

Okay.

00:58:59,000 --> 00:59:02,000

So the, the B wave didn't finish here.

00:59:02,000 --> 00:59:04,000

It probably finished right about here.

00:59:04,000 --> 00:59:08,000

And this decline would become the extended wave of the pattern.

00:59:08,000 --> 00:59:13,000

This E wave and this A wave are virtually identical in time and complexity.

00:59:13,000 --> 00:59:18,000

You can see there's overlap between B and D. There's alternation to the extreme
where D is very big.

00:59:18,000 --> 00:59:20,000

We'd be small, but they do overlap.

00:59:20,000 --> 00:59:25,000

And so this is the explanation for this hyper accelerated and exaggerated.

00:59:25,000 --> 00:59:32,000

Se wave is a little exaggerated, I have to say, but all the evidence on larger
charts suggest that this is what happened.

00:59:32,000 --> 00:59:40,000

It was easy to see when you got details of monthly charts that sort of reconfirmed
what the six monthly charts suggested,

00:59:40,000 --> 00:59:44,000

but didn't produce as nice of a structure as the monthly charts did.

00:59:44,000 --> 00:59:49,000

And then from there on six monthly charts, we had another, you know, nice
corrective rally beginning from there.

00:59:49,000 --> 00:59:53,000

And that's the reason we see has to finish at a much higher low.

00:59:53,000 --> 00:59:55,000

The recovery off this low is too slow.

00:59:55,000 --> 01:00:00,000

Took way more time to get back to this same level as it took to go down to the low.

01:00:00,000 --> 01:00:04,000

So we couldn't consider this to be the start of the uptrend.

01:00:04,000 --> 01:00:06,000

It had to be pushed further and further to the right.

01:00:06,000 --> 01:00:09,000

We needed some kind of violent price action like this move.

01:00:09,000 --> 01:00:16,000

This retraced less than 61% to be the potential start of the new uptrend, not this
much slower upward grind.

01:00:16,000 --> 01:00:18,000

Does that make sense?

01:00:18,000 --> 01:00:19,000

Right.

01:00:19,000 --> 01:00:20,000

Yes.

01:00:20,000 --> 01:00:29,000

So say if we were in July, oh, nine currently, currently, would it be fair to say
that, okay, that that sudden way,

01:00:29,000 --> 01:00:38,000

that would be say, what can you elongate flat where it extends to 261% of.

01:00:38,000 --> 01:00:39,000

Yeah.

01:00:39,000 --> 01:00:40,000

Yeah.

01:00:40,000 --> 01:00:45,000

This is a very difficult situation to understand what all this was at the time.

01:00:45,000 --> 01:00:58,000

And I didn't quite know as much as I now know 12 years later about proper
management of large timeframes and complexity management and all those kinds of
things that I've talked about today in chapter three.

01:00:58,000 --> 01:01:01,000

That are not actually listed in chapter three.

01:01:01,000 --> 01:01:11,000

And if I had that, I would have been able to better manage this, I think, but it
was a very confusing time, even though I did predict as this was finishing, it was
January of 2008, right.

01:01:11,000 --> 01:01:13,000

It's right around in here.

01:01:13,000 --> 01:01:21,000

If any of you were with me at that time or got my service, I was calling for the
biggest fastest market meltdown down in almost, you know, world history.

01:01:22,000 --> 01:01:27,000

And that would be only second to the depression of 1929.

01:01:27,000 --> 01:01:29,000

And that's, you know, exactly what happened.

01:01:29,000 --> 01:01:34,000

I plotted out the entire thing and I showed it getting back below the previous lows
of 2002.

01:01:34,000 --> 01:01:42,000

So it was all mapped out based on the way structure and the bigger picture not
because of this short term structure, but because of the much larger picture.

01:01:42,000 --> 01:01:44,000

It forced me into those conclusions.

01:01:44,000 --> 01:01:50,000

But after that, this whole bounce was extremely difficult to understand what all
this was.

01:01:50,000 --> 01:01:57,000

And I probably could have dealt with it much better now than I did 12 years ago
because of what I know now that I didn't know them.

01:01:57,000 --> 01:02:01,000

But it was very difficult to understand what all this was.
01:02:01,000 --> 01:02:05,000
And it didn't become clear until somewhere in this area that something must have
finished at a higher low.

01:02:05,000 --> 01:02:11,000

And that's when it started to become clear that maybe we had made the major bottom
and we were starting up turn for a while.

01:02:12,000 --> 01:02:16,000

Right. It is quite complex. It is quite complex to follow.

01:02:16,000 --> 01:02:22,000

Does how long does it take to master or do these short term?

01:02:22,000 --> 01:02:29,000

Well, the process to avoid this kind of confusion is to control complexity.

01:02:29,000 --> 01:02:31,000

This chart is extremely complicated.

01:02:31,000 --> 01:02:39,000

I only make these connections so that you can see how the monthly chart starting
from a six monthly perspective connects.

01:02:39,000 --> 01:02:45,000

And then once we make that connection and you see where the C wave is and where the
trend starts, then I just focus on what happened after.

01:02:45,000 --> 01:02:49,000

So the next chart starts right here as part of this highly complicated rallying.

01:02:49,000 --> 01:02:54,000

So I'm only worried about this pattern after wave X and what's happening since
then.

01:02:54,000 --> 01:03:00,000

But I only make these complicated charts just to allow us to quickly connect from
the larger chart to the small chart.

01:03:00,000 --> 01:03:06,000

And I said, oh, this is where the C was and this is where the previous top was and
this is where the pattern starts.

01:03:06,000 --> 01:03:09,000

And I have this advance here and this is where the X wave is.

01:03:09,000 --> 01:03:13,000

So when I go to this chart, you can figure out where this X wave is coming from.

01:03:13,000 --> 01:03:17,000

That's the reason I do that. But I don't actually try to analyze a chart like this.

01:03:17,000 --> 01:03:21,000

Because remember, controlling complexity is absolutely essential to good wave
analysis.

01:03:21,000 --> 01:03:25,000

This chart is not an exercise in controlling complexity.
01:03:25,000 --> 01:03:29,000
It's massively complicated, which means it can't be interpreted.

01:03:29,000 --> 01:03:34,000

Right. Okay. So say you had.

01:03:34,000 --> 01:03:39,000

For argument, he had 13 monowaves on this chart.

01:03:39,000 --> 01:03:45,000

Would you start your account from the lowest low?

01:03:45,000 --> 01:03:50,000

Well, no, you have to start your account from the point where the market produces
violent counter-tran action.

01:03:50,000 --> 01:03:55,000

So you can see here, you know, some people probably, most people would probably
start to account where else is low.

01:03:55,000 --> 01:03:59,000

But you can see this recovery is slower and more complicated than the decline that
it's retracing.

01:03:59,000 --> 01:04:05,000

So the real trend started with the violent kickoff and the retracement that's less
than 61%.

01:04:05,000 --> 01:04:11,000

That's what you're always looking for is where did the real pattern, the new trend
begin.

01:04:11,000 --> 01:04:15,000

If you start every pattern off the lower the high, your wave cancel and never make
sense.

01:04:15,000 --> 01:04:20,000

You'll never understand how patterns behave almost consistently the same.

01:04:20,000 --> 01:04:23,000

That you won't get proper relationships. You won't get proper timing.

01:04:23,000 --> 01:04:25,000

You won't get proper channeling.

01:04:25,000 --> 01:04:30,000

The most important thing you can do is learning where to start your analysis.

01:04:30,000 --> 01:04:33,000

Without that, it's just not going to work.

01:04:33,000 --> 01:04:38,000

We're going to have to call it quits. We're running into a time where I have to
take a break for my next class starts in 10 minutes.

01:04:38,000 --> 01:04:48,000

So there's a few questions here that we didn't get to. So if you all can write
those questions down, it was from Santosh and Nick and Pantham.
01:04:48,000 --> 01:04:54,000
You can just write your questions down and we'll try to go over those next time you
can email me and we'll go through them on email.

01:04:54,000 --> 01:04:59,000

So let's go ahead and call it a day and we will pick this up with chapter 4 next
week.