[Link],755 --> [Link],009

Hi everybody. We're still missing about 40 people, but I assume they'll trickle in
as we start the class. Just wanted to go through questions that Abgeni sent in.
He's asking about using logarithmic charts. The answer of when you use them or
don't use them is basically depending on how much a market moves. If you can

[Link],673 --> [Link],514

Use them all the time, that's ideal. But if it's too much trouble, especially if
you're doing charts by hand, or if your computer system doesn't manage logarithmic
scales very well, then as long as the price of the market hasn't moved up or down,
say more than 25% or so, then it's probably fine. If you move into the 50% range,
and especially if it starts to get into the 100% range, where maybe it starts at
100 and goes to 200,

[Link],905 --> [Link],995

Are 200, 400, something like that, or more. Definitely need to use logarithmic
charts. So let me unlock your mic if you're in the class. Okay, so Evgeny, you have
any further questions? Yeah, thank you very much, Glenn. It's clear. So do you need
any special requirements? Do you measure retracements in a different way? Or are
the main principles the same?

[Link],899 --> [Link],748

Well, the best way to measure distance and retracements in Fibonacci relationships
is definitely a log scale. But if the market hasn't moved very much, if it's going
sideways for a while, then those log charts aren't that necessary. It's only when
it's progressing comfortably up or down that you need to use log charts to get
proper retracements and relationships. So the measurement you're looking at in log
scale will be the actual physical distance. So if it's one inch from

[Link],807 --> [Link],084

You want it to be, you know, 1.61 inches maybe for wave C or 0.61 on a minimum for
wave C. And that's on physical distance right on the chart. And otherwise you have
to do it all by hand or on a calculator. Okay. Thank you. Thank you very much.
Okay. Okay. And then Lowell had a question. This is regarding a specific situation.
We'll have to save that for later. So let's go ahead and...

[Link],459 --> [Link],127

Get started because this is the most complicated chapter in my book, but I think a
lot of you will be very happy about approaches you can take that will dramatically
simplify chapter three and the beginning process of analysis, you know, how you
start and what you do. So first and foremost, even though I do say it in my book
otherwise, I want to make it very clear that when you're beginning the analysis of
any market,

[Link],383 --> [Link],711

You always want to start from the largest time frame and data series you can get
first and work your way down. This would be even if you have to construct the data.
So let's say you're dealing with something that covers, you know, 50 years. If you
can get half year data or two and a half year data where you'd have the highs and
the lows in the order they occurred in real time and you plot them in the fashion
we talked about in chapter two last time,

[Link],241 --> [Link],360

Then that's ideal and your goal once you do that is you want to control the
complexity of your chart so that it doesn't have more than about 55 monowaves on
the maximum end and no less than about 13 on the minimum side. And if it's a move
that's going somewhere, it's trending, you want that

[Link],264 --> [Link],229

13 to 55 monowave structure to progress at about a 45 degree angle. So fitting in
with almost a perfect square. If that action is going mostly horizontal, then
you're going to want it to fit in half of a square. So you take a square and you
cut it in half and so it'd be a rectangle. So half of a square would be the ideal
structure that would fit horizontal price action. So always begin your analysis
from the largest timeframe first.

[Link],374 --> [Link],394

Get it to where that time frame available gets your complexity level between 13 and
55 monoways. Once you've done that, then you want to find the highest high and the
lowest low and figure out which one occurred first. And that's where you're going
to start your analysis. And if the low happened first, then of course assume you're
in an uptrend.

[Link],752 --> [Link],742

And you're going to look at the retracement of the first up move and decide was it
retraced less than 38%, more than 38%, less than 61, more than 61. Anywhere in the
38 to 61% range is going to be the typical impulsive range where you can consider
the move prior to it an impulsive pattern.

[Link],168 --> [Link],684

If it's less than 38, and especially if it's less than 33, then it starts to move
into the corrective territory. And if it's more than 61, it also moves into
corrective territory. So virtually anything other than 38 to 61% retracement is
going to put you into more likely corrective territory for the move that happened
before the 38% or 61, you know, before the corrective. Okay, so let's move on to
the next page.

[Link],500 --> [Link],538

This shows a chart that's just laid out over a period of time. You can see the
monowaves that are plotted in the order that the highs and lows occurred. So it
looks like a chart. And this will produce much better results than trying to use
bar charts. So if you have, I think we might even have this, if you have
TradeStation, we might have some old piece of software that takes any market and
plots the highs and lows in order.

[Link],014 --> [Link],459

I haven't talked to Stefan about this in a long time because I prefer using the
Excel data sheets and letting it do the work there. But we might have that. So if
you have TradeStation and you're interested, write to Magellan and ask him if, as
long as you have TradeStation, if we still have that software and we can look for
it and see if we can send that to you.

[Link],987 --> [Link],240

But you're going to want to plot out all the data you have. And then here you can
see here is the lowest low. It happened first. Here's the highest high. It happened
second. So your analysis would begin from this low. And that's when you would begin
deciding, you know, is this first move up retraced more than 61%, less than 61%,
38%, whatever the situation is. And based on that information, you would determine
that this move might be impulsive, possibly corrective,

[Link],581 --> [Link],336

But it could be an impulsive move based on the kind of action that happened
afterward. And then you would do the same thing for every single move on the chart.
And you're going to piece together over time a series of monowaves, each marked
with a three or five, and then looking for sequences, which we'll talk about later.

[Link],473 --> [Link],538

So that's the first and most important thing is starting from your longest time
frame chart and let's just pretend this is a six monthly high-low chart. So we
start the six monthly analysis from here and you go through the process and it
appears that something important may have ended here because the market has a
violent change of character with this drop. It's bigger than this decline, this
decline, and this decline.

[Link],947 --> [Link],858

And it's faster and larger than the very last advance. So suggest something old
ended and something new began. So on your six monthly chart, this might be the
structure you have and where you start the analysis. But when you move to a smaller
time frame, a monthly chart, which is approximately one-fifth of six months, you
would begin your monthly chart from the most crucial important

[Link],199 --> [Link],752

Turning point on the six month chart after the beginning of the chart. So you go
through this process, you would look for these violent price movements like this.
Say well on this chart this is probably where something new began and I'll start a
monthly chart from here. And then as you work through your monthly chart you might
realize that this looks like a flat pattern and you could start a weekly chart from
here and you might eventually start a daily chart from there. So realize that as
you

[Link],247 --> [Link],451

Work on smaller and smaller time frames. You have to zoom in and cover smaller
periods of time. Otherwise, the complexity in the chart starts to exceed the 55
monowave limit. So that's the reason why you keep moving to shorter and shorter
time frames, because as you move to a monthly chart starting here, it'll be

[Link],623 --> [Link],895

Once you've gone through this process and decided not only the time frame but you

[Link],090 --> [Link],128

Draw on your chart the complexity of it is not too high and it's the largest time
frame you can work with and you've identified the low and the high. Then you're
going to want to identify the proper turning points for each particular pattern.
This is what these little dots on the chart are here for and I use these dots
because sometimes you have to move the dots around depending on how the market
behaves. We'll get into that with the rule of neutrality which is covered I think
in a few pages.

[Link],691 --> [Link],118

Okay, so going back to what I mentioned earlier regarding scaling your charts, this
is done to always have the look and feel of your charts approximately the same
because you want to get used to certain kinds of patterns producing the same kind
of behavior over and over. That's only going to happen by, number one, controlling
complexity and controlling the angle of ascent of the patterns that are forming.

[Link],647 --> [Link],342

Again, if it's a trending pattern like this, you want it to go up at about a 45
degree angle. If it's a sideways action, you want it to go at about, well, half of
a square. So it's going sideways and not covering more than about half of a
rectangle. I mean, sorry, half of a square.

[Link],673 --> [Link],927

So let's see here's an example of a 45 degree angle for the trending phase and then
you have the corrective phase where the market's moving sideways for a while. You
can see how this is diagrammed on a small scale here.
[Link],302 --> [Link],783
The bigger advance here and then more sideways action. So as you're breaking down
your charts, you might have the larger pattern like this, and then you might start
a smaller pattern on a monthly timeframe from this period. And then again, you
might start a weekly chart from here and a daily chart from there. And each time
you're moving to your lower timeframe, you're controlling complexity. You're making
sure that the advancing moves are going at about a 45 degree angle. The corrective
periods are only covering about half of a perfect square.

[Link],212 --> [Link],493

And here's an example of some leeway. I mean, it doesn't have to be a perfect
square. It might end a little bit to the right, a little bit to the left. So
there's a little bit of leeway in that process, but generally you want it to be
almost a perfect square from beginning to end by the time the pattern finishes.
Here's some examples of that. So this one ends a little bit above, this one is a
little bit early, but it's basically, you know, a directional phase.

[Link],186 --> [Link],967

Here it shows where it's just happening too fast and you want to use your computer
or use your hand-drawn charts and just readjust a little bit where you would move
the conclusion of this high to the right so it falls into this 25% range here. And
again, this is not crucial long term. This is more for beginners to make sure that
you're

[Link],445 --> [Link],336

Trying to get your charts to look as close to the diagrams in my book and produce
the same kind of behavior over and over so you get used to what actually happens
when a flat finishes or when a five-way move finishes and it becomes a lot easier
to trust what you see from a trading standpoint. Here shows how a corrective period
would cover maybe half of the perfect square instead of the full square.

[Link],813 --> [Link],974

Same thing for this correction here. Okay, that's doing that there also. So now
let's move on to the rule of neutrality and how we deal with the conclusion of
these dots that occur.

[Link],572 --> [Link],533

As you mark them on the chart. So if you go into a lot of trouble to mark every
single turn, and these are only placed when the market actually changes directions.
So you wouldn't actually place it here first because the market's going up. It's
slow, but it's going up and it keeps going up. It's just moving faster. So this is
not actually a turn. This is a point that

[Link],892 --> [Link],527

Needs to be considered for analysis purposes as the real conclusion of the decline
instead of this. Has to do with channeling and because the market went mostly
sideways, which you have to imagine, let's say this is a weekly chart, what would
have actually happened on a daily chart is it would have bottomed here, bounced up,
and then come back down and had a new weekly low that's a little bit higher than
this one. But when you're plotting weekly highs and lows in order, you're not going
to see that daily bounce. You may end up just seeing

[Link],386 --> [Link],004

One week's low, the next week's low, it's going to miss that daily bounce before it
came back down, and then the weekly high. So stuff happened here that you can't
see, and you have to be aware of what this means. And when you're channeling, you
don't want to have a channel cutting through price action like this. So using the
rule of neutrality, you would look at this and notice that if the chart is drawn
properly at about a 45 degree angle for the advances,
[Link],585 --> [Link],974
This period would become a sideways kind of plot and it wouldn't look like it's
very directional, so it would give you the option of moving your dot from here to
here. That's applying the rule of neutrality and realizing that this is probably
the real conclusion of whatever started at this high.

[Link],400 --> [Link],514

And it didn't technically end there, but it ended here. So you would move your,
after assessing this chart, you would move your dot from here to here. And when you
go to channel, you would have your channel touching this low and touching this low
and going up that direction. Now here's an example of a situation where you may or
may not want to apply the rule of neutrality. If you place a ruler on the chart or
in your book, if you have one, you can see that this bump right here

[Link],769 --> [Link],759

Did not actually touch a channel. If you draw a channel across this low and this
low, this doesn't touch any channel, so it's not quite the same situation as this.
And it leaves it open to potential interpretation, and it might better apply to
Fibonacci relationships where if this is a five-wave move, one, two, three, four,
five, just pretend that's a five-wave move. If it's a five-wave move, then the
relationship of wave three

[Link],048 --> [Link],182

Include commas, periods, questions marks, and apostrophes as needed.

[Link],779 --> [Link],625

Optional call on the analyst part to decide based on future action Fibonacci
relationships whether to use this point or use this one and based on channeling.
But this one definitely would have to be moved because channeling would force you
to move your conclusion of this decline here. This would not be considered two
monowaves. It would be considered one monowave ending right here and then the start
of the next one. So each dot is marking the conclusion of one monowave sequence and
then the start of another one.

[Link],274 --> [Link],591

If a market is going upward and has sideways action and then goes downward, most
often the conclusion of the uptrend is going to be here, not over here. And if it
bottoms and reverses and goes up, then the conclusion of the downtrend would be
considered here. Again, because if this is a weekly chart or even if it's a daily
chart, intraday or intrabar, there would have been a bounce and then a drop back
down to create this secondary low, which may or may not be lower. But if it's
higher by even one tick,

[Link],070 --> [Link],114

You would still assume that the trend actually ended here that started up here.
When you get directional action followed by sideways action followed by directional
action, and this is actually not going down, but it's maybe one tick or two ticks
or more higher. So it's slowing down the uptrend but not stopping it.

[Link],797 --> [Link],384

The angle of this will help to decide whether you pay attention to it or not. The
steeper it is, the less important it is to worry about. The more sideways it is on
a properly proportioned chart, then the more you need to consider it possibly a
correction. So in either one of these scenarios, this could be a one, two, three,
or the whole thing might just be wave one. And based on before and after,

[Link],544 --> [Link],258

You would have to decide whether you're going to ignore this or use that to better
facilitate your wave count and solidify a good structure. Okay, let's move on.
Here's some examples of how you can use it with a lot more specific detail.

[Link],530 --> [Link],455

If your chart is properly proportioned and the angle is more than 45 degrees,
probably you're not going to count the lower point as the conclusion of the
advance, but you'll just count the high as the conclusion. If it's above 45
degrees, then you need to more seriously consider the point as the end of the
previous advance, so you would move the dot from here to here or from there to
there. But in this case, I'd probably just keep the dot at the high.

[Link],932 --> [Link],852

Be more useful later because if you move your dot then it's going to change you
know relationships and the length of moves and things like that so it becomes it
has more use later on but initially it's just important to get these turning points
identified precisely so you know exactly where you're making your measurements and
how much retracement occurs after you know move starts. If you're starting from
here the retracement of 61 will be higher than if you start from over here. Okay

[Link],144 --> [Link],159

That's just, sorry, that's just some more examples of that. I'm not sure if the
chart's going to mess up again. I may have to close the stupid application. Okay.

[Link],200 --> [Link],769

Okay, so I don't think there's much else to say there. If you have any questions,
you can type those in real quick before I go to the next page. I'm going in my
actual physical book here and just referring to my notes to make sure I'm not
missing anything. Here's an example on

[Link],134 --> [Link],895

Page 913. Here you go. Here's some examples of how you might actually move your
dots. In this case, the angle of ascent was more than 45 degrees, so I kept the dot
here. Here was very, very low, so I moved the dot to there. And here's a situation
where you're going to have to

[Link],834 --> [Link],910

Determine using aspect two of the rule of neutrality and based on action before and
after whether you're going to count this or ignore it. And based on the possibility
that a flat pattern may have started here, this could be wave A ending here, wave B
and wave C. C waves and flats are five wave moves, so that would suggest you
probably would want to count this as wave one and wave two, three, four, and five.
But if for some reason you thought maybe you were in a triangle,

[Link],336 --> [Link],694

And this is wave A, B, and C, and you don't want to have a five-way move for wave
C, then you might end wave C here, and then wave D might start from this log. So it
depends on what the bigger structure is implying, and you have some flexibility
when price action produces almost sideways action, but it doesn't actually go
against the trend. Okay, so here is the net result of the analysis, where all the
dots are moved to their proper place, and this

[Link],915 --> [Link],772

Subjective, you know, possibility of determining using it one way or the other. And
that's where we can then start the retracement observations, which is where chapter
three gets very complicated. So to make wave three, I mean chapter three, a lot
less complicated, you can start to look at most action just from a perspective of
whether it's impulsive or corrective. And during the corrective phase,
[Link],729 --> [Link],978
How long does it last before it makes a new high, or how long does it last before
it makes a new low? So if you go through a very short-lived correction, like it
might be about the same length of time as the advance or just a little bit more,
and it retraces less than 61%, but more than 38, then that strongly favors that
this move would be impulsive. If the move takes a lot more time than the previous
pattern, previous monowave in this case,

[Link],490 --> [Link],820

Then it's far more likely that you're dealing with corrective activity. Because
impulsive action, you don't want to have wave two take more than about three times
the time of wave one. And it needs to be more than 100 but less than about 300. So
if it's more than 300 or less than 100, then you're dealing with corrective action.
So it's similar to the 38% to 61% range. In that 38% to 61%, there's a strong
chance you're dealing with an impulsive move

[Link],212 --> [Link],756

If it's more than 61 or less than 38, then the odds start to favor that the
previous M1 in this case would be corrective. That also applies on a time basis. If
the time is between 100 and 300 percent, then it's more acceptable to assume this
is impulsive. If it's more than 300 or less than 100, then you have to assume this
is corrective.

[Link],575 --> [Link],472

Okay, so those are the primary dividing points for all patterns, and it makes it
easy if you're going through your real-time chart. Just apply those rules in the
simple way that I just mentioned, and you can start placing threes and fives
quickly on all your different highs and lows. Of course, placing them at the
turning points that you've marked with those dots. And then once you have

[Link],394 --> [Link],291

10, 20, 30 of those in sequence. Then you can go back and start looking from the
very beginning of the chart. You want to start looking for identifiable sequences.
And those are discussed a little bit more, I think, in chapter 4 and chapter 5. But
some of you, I'm sure, already know that some of those identifiable sequences would
be like a 3-3-5 would constitute a flat.

[Link],990 --> [Link],923

A 3-3-3-3-3 would be a triangle. 5-3-5-3-5 would be an impulsive pattern. So these
markings, what I call structure labels, will help you to decide where the sequences
are and where you can begin one pattern and end that pattern, and then you can look
at that

[Link],212 --> [Link],278

Beginning to instruction, decide does it follow the rules of a flat, does it
channel like a flat, does it have the relationship of a flat, or whatever pattern
and whatever sequence that you've discovered.

[Link],165 --> [Link],417

Using this process, you can probably skip a great portion of what's discussed in
Chapter 3. And if you start your charts from the longest time frame first and
control complexity, a vast part of Chapter 3 will be unnecessary. When I wrote my
book, I was trying to

[Link],417 --> [Link],250

This of course was 30 years ago. I was trying to allow someone to begin from the
smallest time frame and work their way up and that was a big mistake because it
made the process a lot more complicated than it needs to be but I didn't know it at
the time because I hadn't had 30 years of experience when I wrote my book. So by
starting from the largest time frame and working your way down and controlling
complexity every time you create a new time frame and a new chart that will
dramatically

[Link],643 --> [Link],814

Reduce the need for all the complexity of chapter three and all the discussions of
chapter three. And then regarding the most crucial structural identifiers, which
would be the L3 or the L5. The L3 means it's the end of a correction. The L5 means
it's the end of a flat or impulsive pattern or a zigzag.

[Link],615 --> [Link],079

You can easily generally find those events just by looking for violent price action
on the market. Like for example, you can see how this move is followed by a slower
but larger decline. So there's no way this is an L5 or an L3 of anything. It can't
be the last wave of anything. So remember an L5 and an L3 denotes the very last
three or the very last five of a sequence.

[Link],625 --> [Link],957

And when you finish the sequence, you're going to want to have violent price action
that retraces the last move in the same time or less, larger and faster typically.
So if you're beginning the analysis on a chart, the most important thing to start
looking for is what is the largest, most violent move on the chart.

[Link],724 --> [Link],401

And that large violent move, with no exception, will always be in the direction of
the trend of the structure you're dealing with. So that means it'll either be wave
one, wave three, or wave five of an impulsive pattern, or it'll be wave A,

[Link],708 --> [Link],946

Wave C or wave E of a corrected pattern. It will not be anything else. Okay, so
that's a very important way to identify what's important on your chart and where
you should begin the analysis. And I always start with the largest, most violent
point on a chart, starting from the largest time frame.

[Link],391 --> [Link],963

And that's where I begin either wave A or wave one or wave three or wave five or
wave C or wave E. It's got to be one of those six waves. And based on what happens
around it and how major the top or the bottom was, if it was a very long standing
high or low, then you wouldn't assume it's going to be, you know, wave three or
wave five or wave C or wave E. It would probably be wave one or wave A. So that's
the way you should begin your analysis. And if you do that, it makes things a lot
easier.

[Link],192 --> [Link],961

So most of these, you know, highly complicated charts are not that necessary if you
follow the rules that I just mentioned. Let me look back in my book here. I'm going
to skip most of the majority of chapter three now because that just goes into
tremendous amounts of detail.

[Link],318 --> [Link],288

On all kinds of labeling processes and deciding whether it's an F3 or an L3 or you
know whatever that that stuff is not as important or not as critical to to identify
as long as you plot your charts correctly and you look for violent price action
because that violent price action will generally be the beginning or the end of
something important and once you know that then it becomes a lot easier to begin

[Link],544 --> [Link],069

Placing structure labels and even moving on to placing progress labels, which would
be 1, 2, 3, 4, 5, or ABC. Okay, we're looking for the implementation of rule
identity. Yes, I'm going to have to skip a ton of this stuff here. Give me one
second.

[Link],301 --> [Link],998

This just regards retracements. So you have your M1 here, which is going up or
down, it doesn't matter. And then you have your price action after. If it's
somewhere between zero and one, that's a multiplier. So 100% of this or 161%.

[Link],681 --> [Link],830

Again, that gets very complicated and tedious, and I don't really think it's that
necessary if you begin your analysis from a large time frame, control your
complexity, draw your, proportionalize your charts at the 45 degree angle, and so
forth. Then most of this becomes not that crucial anymore. I'm going to keep going
here. We have a lot of pages to skip.

[Link],086 --> [Link],073

While I do this and try to find where we're going here because it's a lot of pages
I have to go through, how many of you, if you can answer in the chat section, got
caught up on chapter three and sort of gave up on my book? Because that's from my
experience where most people

[Link],328 --> [Link],067

Really get bogged down. They think they're supposed to read chapter three and it's
not a chapter you read. It's a chapter strictly like a dictionary or an
encyclopedia. You have a situation and you refer to that specific situation and
only that situation and only read the small little section that applies to it and
you ignore all the rest. But a lot of people try to read through it and there's
warnings at the beginning of chapter three saying don't read it. Just focus on the
conditions that apply.

[Link],577 --> [Link],847

On your real-time chart, find that in chapter three and then apply the rules. But a
lot of people just miss that and they get caught up in it. Okay, serious talks
about the implementation of position indicators. These are the Ls and the Fs and
the Ls, like the first three, the first five, the last three, the last five. Again,
that's gonna be very easily identified strictly by looking for violent price action
on a chart. So it's not gonna be,

[Link],973 --> [Link],333

Very difficult to find. The largest fastest move on the chart will almost always be
an L5, an F3, F5, or an L3. So it's one of those four and you just need to figure
out based on the other threes and fives on your chart which one it happens to be. I
don't want to go through any of this stuff. It's way too much complicated detail.
It's not necessary.

[Link],602 --> [Link],878

Okay, so let's talk about this search for violent price action. So you can see on
this chart, you can see the most violent moves have been occurring to the downside
until here. Now, all of a sudden, we have the most violent movement occurring to
the upside. And this move is a lot bigger and faster than this move and even this
move. So this, not starting here, which is where most people would start, they'd
go, you know, one, two, one, two, that kind of thing, maybe three, four, five.

[Link],903 --> [Link],915

When you're starting a new trend, the trend is not, the first move of a new trend,
not a corrective pattern, but the first move of a new trend will not be retraced
more than 61%, usually comfortably less than that. So you can see here the rally
off this low is slower than this decline, so that's warning number one, that this
is not a trending move, but it's a counter trend move. This again is faster, but
not quite as big as this. Then you get a move that's slower and smaller than this.

[Link],189 --> [Link],381

And then you get a move that's decently quick, but it's smaller than this. And then
all of a sudden you get a violent upside move that's the biggest, fastest that's
been seen in quite a while. So this is where you would begin your analysis, not
from here. Also, you don't want a first wave to be retraced more than 61%, so that
would negate the idea of this being a one-two. And you're looking for violent price
action. So the only two important points on this chart

[Link],739 --> [Link],571

Would be this high which produces the first largest fastest move and that in this
case is an f3 and then you have this l3 which is because the next move up is so and
you know that this can't be an impulsive pattern it's all sideways action so it
would have to be an l3 so the last three of some kind of corrective sequence and
this begins your first most violent move up

[Link],913 --> [Link],265

And it's not, well in this case, it should have been retraced a little bit more to
be an official five-wave move. A few of the diagrams in my book are not drawn quite
as accurately as they should be. It looks to me like that retracement is around
33%. It should have been a little bit more. So you might want to mark on your chart
that to make this an almost confirmed five, this should have dropped a little bit
more to maybe about right there. Otherwise it's possible this is a zigzag and this
is an x-wave.

[Link],265 --> [Link],172

So that's why the less than 38 percent retracements become questionable and
possibly makes the previous move a corrective rally and this is just an x-way
followed by another corrective rally. So if this is just a little bit bigger, this
would be a confirmed five-way move followed by a confirmed correction and then
another impulsive pattern after that. So again, plotting out your whole chart,
going through all the dots and identifications and rule of neutrality and all that
stuff, then you're going to be looking for the violent price action to determine

[Link],411 --> [Link],210

The start of something or the conclusion of an old pattern and the start of a new
trend. Here's some, is that the same chart? It looks like the same chart. Yes, the
same chart. So it's talking about different ways of figuring out where you start
the analysis. You'll want to definitely make sure to read this section. It's very
important to understand where you begin your analysis.

[Link],517 --> [Link],376

Another way to figure out where to start your analysis is if you measure any amount
of time on a chart from some high to some low, and you take that square and
duplicate it, moving it forward, if the market hasn't retraced the previous move in
that same amount of time or less, so if you draw a square from here to here and you
duplicate it forward, let me figure out where that would be, hold on a second.

[Link],045 --> [Link],956

Okay, so that would be right around over here. So if the market hasn't exceeded
this starting point in that same amount of time or less, then this is not the
proper place to begin your analysis. There is a video on our website discussing
this. This was back about 20, 30 years ago when I was a lot younger. Let me pull
that up if I can find it real quick. It's under the education section.

[Link],202 --> [Link],445

Let's see video workshops and yeah there they are. Okay so I'm going to go ahead
and copy this and paste it over into our little session. Okay in the chat section
I'm pasting it right now. Hopefully that link works. So that you can go and watch
those videos there and it talks about various different things. Complexity of
charts,

[Link],769 --> [Link],565

Starting your charts at the right place and so forth. So one of those techniques is
just measuring any period of time from some high to some low. And if the market
hasn't retraced that whole move in that amount of time or less, then this can't be
the start of the trend. And you would do it again. You would reanalyze and move
your analysis to here and then move it to there. And eventually it needs to retrace
that whole timeframe in the same amount of time or less, otherwise you're starting
your count from the wrong place.

[Link],855 --> [Link],005

And that you didn't start a new trend from here and probably not there but this is
where it began because we finally had a real trendy violent counter trend move.
Okay so let's move on to the next chart. Now when you're dealing with smaller
patterns inside of bigger patterns

[Link],414 --> [Link],311

This is discussing that process where you might have had a five, three, five, and
again, this retracement should have been a little bit more, but five, three, five,
zigzag. Once that zigzag is done, then you can compress that and create a singular
correct, what the hell is going on with my phone? Hold on a second, I gotta turn
off these alarms that are going off on my computer. Okay.

[Link],001 --> [Link],817

So you can compress the corrective patterns to produce a larger similar degree
pattern. We'll get into the rule of similarity and balance in chapter four, but
this would still be considered a same degree structure because it's similar in
price to a previous move. It's not a lot more complicated, so it falls into the
similarity rule that will be discussed in chapter four. But this compaction process
then allows you to identify a larger structure, which in this case would be a flat,

[Link],108 --> [Link],005

And after the C wave here, which would be marked as an L5, only after you see the
market produce this violent counter trend move that's larger and faster than this C
wave of that flat. It's that kind of price action that tells you something old is
finished, something new has started, which would make this an L5 or an L3. If it
was an L3, it would have to be, you know, some situation in which the structure
allowed it to be a three instead of a five, so maybe a triangle.

[Link],516 --> [Link],340

Or some kind of complicated correction. But in this case, it makes sense. It has
the look of a flat. It has the design of a flat. It has the behavior, post-behavior
action of a flat where wave C is completely retraced in the same amount of time or
less. And the move is actually larger. So this is the kind of violent price action
you're looking for to identify those L5s or L3s. And if it's

[Link],646 --> [Link],851

The first violent move of a sequence and the trend doesn't come to end, so in this
case it drops, it doesn't get back above this high, and it doesn't do it quicker,
and then it starts making more new lows, and that would more likely be the first
three or the first five instead of the L3 or the L5. Okay. Just talking about some
special circumstances.

[Link],731 --> [Link],639

I don't think that's very important for this purpose. So we're a little bit ahead
of schedule. I had a question that came in an email. And y'all can send some
questions in while I'm going through this real quick. But let me get to that
question. It was something to do with a market, I think. I know we don't go through
actual market analysis in the introductory class. But let's see. Let me see if
you're in the class right now.

[Link],079 --> [Link],045

Okay, allowing and unlock your mic. So specifically you're asking about a gold
count or? Powell? Yeah, I'm looking at wave A and B on like the six month for gold
on the Excel. Are these charts that we sent that we created through our Excel
service? Yes. So you're looking at the six monthly gold?

[Link],213 --> [Link],677

And then I'm curious on the measurement of A and B to determine if they've
completed. So which chart, which one of these charts are we talking about? I think
the one where it doesn't have C yet on it, maybe the yearly.

[Link],889 --> [Link],855

This one? Right here. Yeah, that one there. Okay, so what about it? So assuming
that if A is correct, then what would be the length of time that B would run? And I
think from the cheat sheet, you draw the square from A and then put that over to B.
And here's an example of that. So this is a log scale because it's covering so much
price territory. This is the only proper way to draw this chart.

[Link],161 --> [Link],077

You see I've measured the time of wave A. I've duplicated. That's the minimum time
for wave B, and we just reached it. So now we've reached the minimum time for B. It
could last up to two or three times that long very easily, but at least we've
reached the minimum so we can consider this as a more normal correction. We're not
dealing with triangles. We're not dealing with anything bizarre. So it's just a
typical flat, maybe a triangle, but more like a typical flat kind of correction. If
it was a triangle, wave A would be more violent.

[Link],077 --> [Link],275

It's not very violent at all. So this looks like we're just in a flat or we're in
some kind of larger complex corrective decline to eventually get us down below 600.
So, you know, it could get an ABC and then an X wave and another ABC to eventually
work our way down to below the top of wave one. Does that answer that question?
Yes, yes, okay. Is there any other part of that question or is that the whole
question?

[Link],128 --> [Link],793

Just the technique of drawing your squares and then moving them over. That may be
more of an Excel question though. Well, as far as how I get them on the chart?
Yeah. You just go up under insert, go under shapes, and select whatever you want.
Select a rectangle, hold down your shift key, and it'll make a perfect square. If
you don't hold down your shift key, it'll make a rectangle.

[Link],253 --> [Link],943

So if you don't hold the shift key down, you can make it any shape you want to, but
if you do, it'll make it a perfect square. Okay. Okay. All right. Okay, so that's
it for the emailed questions. I'm going to go ahead and delete that. Anyone else
has sent any questions in? I don't allow, can you put your mic on mute?

[Link],384 --> [Link],188

Okay, so I don't see any other questions that have come in. I don't see anybody
asking any questions, but I find a little unusual because chapter three is quite a
complicated chapter, at least the way I originally wrote it. Let's see. Oh, I do
have some questions here. Sorry, I wasn't noticing them. I was looking at the chat
room instead of the question. Okay, so Pan Chai says, I have sent an email. Okay,
so we've already gone. Didn't we go through that? Let's see.

[Link],684 --> [Link],039

Panchay, I think your question was about NRT. Oh no, it's not. Okay, hold on. Let
me move that to the waste section. I thought it was an NRT question. Yeah, you must
be in two classes. So let me go ahead and open up your microphone. Okay, Panchay,
I've unlocked your microphone. So you want me to go and open up your email?

[Link],418 --> [Link],581

And I have a question about the Excel. How you can use Fibonacci in Excel? How we
can use the retestment? Oh, OK. Let me open up the chart that you sent. I don't see
anything opening. It might not allow it. There may be some kind of block.

[Link],018 --> [Link],135

I don't think it's, what's on your chart? Let me see if I can open it on my Mac and
get an idea of what it is. It's a chart that I used your method to create it. Okay,
I'm going to look at it on my Mac and see if I can maybe take a picture. Okay, and
which market is this?

[Link],362 --> [Link],452

This is a stock market in my country. I'm going to probably take a picture of it
and send it over to the Windows environment so that we can look at it there. I'm
just trying to get the right proportions here so it looks good. I'm going to
stretch the chart up a little bit.

[Link],909 --> [Link],681

So let me take a picture of this real quick, and I'm going to move it over to the
Windows environment. It opened on my Mac, but it just wouldn't open in my Windows.
I can almost have it done here.

[Link],606 --> [Link],806

Okay, so let's go ahead and open up that chart. Okay, so there's your chart. So
what about this? That's, by the way, this chart is way more than 55 mono ways, so
that's mistake number one. So it's a perfect example. It's in the sheet. It's in
the sheet two.

[Link],217 --> [Link],762

Okay, well I don't have to go back and redo all that stuff again. But as far as
analyzing a chart like this, first thing you want to do is you can see if this is
all your data, six monthly chart. You have a major low here, but it's not going to
be that crucial to figuring out what's going on. What happened?

[Link],322 --> [Link],898

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. This is the largest, fastest move on this chart.

[Link],530 --> [Link],141

In, you know, quite some time. So I would probably begin the assessment of what's
happening here. And it looks like even that might be too many monowaves. So the
next thing I do is have to find the next most important point to start this
analysis. And it would probably be from right here, possibly. This is a strange
behavior because it's a very violent drop, but then it gets completely retraced
with a slower advance.

[Link],585 --> [Link],869

So it makes this look very strange right in here. This might be a very difficult
market to figure out what's going on because we're dealing with highly complicated
corrective action. And it might take some time. You probably should go to a two and
a half year chart first to simplify this data and start back at the beginning.

[Link],295 --> [Link],630

And once we have that, then maybe we can start to piece together what happened.
This chart's getting a little too complicated, and none of the starting points that
we might use seem to be that. If I was forced to guess, I would say this is wave A
of a huge corrective environment, and this whole rally is wave B, but it's not
finished, and we won't know when it's going to finish until we get a violent down
move, and that would be the end of wave B and the start of a very

[Link],175 --> [Link],833

Prolonged multi-year corrective C-wave decline. That would be my quick first guess
based on the behavior that I see. I don't know if that answers your question or
not, but you have to control complexity to do good wave analysis, and this chart is
too complicated. Okay, so can you try to read through it? Any chance you could do a
two and a half year chart and send it to me for next class? I do a three year at
least.

[Link],722 --> [Link],072

Okay, perfect. So if you can send me the three-year chart. Start a three-year chart
at this low, and we can take a look at that next time. Okay. Okay. Okay, so let's
close that and go to the next question. Yeah, Santosh is saying wave through is too
complicated. I agree, and I sort of regret making it so complicated, but I was
trying to have my book

[Link],472 --> [Link],458

Pretend or play the part of a real-time instructor like you were taking my class
and I was there holding your hand and telling you exactly what every step of the
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 and that's what
made chapter three so complicated.

[Link],927 --> [Link],869

Okay, and see Hamid says, I skipped most of chapter three, but continue reading.
Yeah, so again, most people get bogged down and most people give up around chapter
three, but it's good that you continued. Yeah, chapter three, Hamad's saying that's
too complicated. So the difference between XC3 and F3 is the retracement that the C
is lower. I'm not quite understanding this question, so I'm going to unlock your
mic.

[Link],619 --> [Link],135

This is Kanjahan, I'm just guessing on how to pronounce your name. Okay, so what's
your question? Yeah, in figure 331 in your book. Okay, let's see, 31, I'm just
going to have to go back and look at that real quick, see if I can find it. Figure
31, what page is that? Give me a second.

[Link],954 --> [Link],166

It must be very early. The page that we just looked at. Oh, it's the very first
page of chapter three. Oh, no. The second page. Oh, it's the wrong thing. Hold on.
Let me go back up this. So, let me...

[Link],701 --> [Link],994

You don't have this diagram? There's no diagram on your, nope, 3-3-1, 3-31. Oh, 3-
3-1. Oh, so that's way far along. Okay, hold on. Around what page is that? The
pages are at the bottom of the book.

[Link],284 --> [Link],994

65, I'm not sure. Okay, okay, so it's quite a far distance. It's not inside the
complicated part, right? It's toward the end? Yes, toward the end. Pattern
isolation procedure, that's the headline. Almost at the end that you said the train
started last three, the flat following with, yeah. Okay, so what about it?

[Link],565 --> [Link],342

You see the XC3 after, yeah, that part. How can you identify if it's F3 or XC3?
Here? Yeah. No, after the five. After here? Yeah. Okay, so how do I identify this?
Yeah, this and the first three at the end. Between.

[Link],639 --> [Link],606

Yeah, between those two. Okay, well, I mean, this goes through a lot of discussion
in the book, discussing probably how these labels were placed on the chart. So I
recommend you reread that section. What happened? That was weird. It just crashed.
Hold on a second. I got to reopen that. You have to reread that section of how I
got to that point. I'm not really...

[Link],028 --> [Link],032

I'm not really sure of the discussion I had. It's 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, it has proper relationships to the flat, has
the proper timing of a flat, then you can solidify that as a flat. So if this is a
flat and the retracement of that flat is less than 61%, by definition, it would
have to be an X wave followed by another correction.

[Link],253 --> [Link],708

So even though this is actually too tiny to be a legitimately good x-wave, it
should have been more complicated and more time consuming. 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.

[Link],014 --> [Link],193

But if you want to mark on your chart, this should have been probably about three
monowaves 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 X wave. So this
would really be substandard and probably not a legitimate X wave because it's a
little too tiny. But if it had taken a little more time, retraced a little bit
more, a little more complexity, then that would have made for a good X wave. And if
the flat pattern,

[Link],722 --> [Link],800

Follows all the rules and it doesn't get retraced enough, then by definition it
would have to be an X wave. 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, but I can tell you now
that would be the process that I would go through in my mind that this is a good
structure looking flat. This doesn't retrace it enough. This looks like a good
contracting triangle. So this is the only thing separating a good flat from a good
triangle, which would make that an X wave.

[Link],422 --> [Link],759

That make sense? I will read your book first, yeah. Okay, let me go to the next
question. So go ahead and put your mic on mute. Okay, so it says my six monthly
chart shows the fifth wave is an extension. I only see three waves. So let me pull
up that chart.

[Link],596 --> [Link],407

So this is Hamid. So I'm unmuting your mic, Hamid. So you're talking about this
structure here? Yeah, so, you know, from the fourth wave of the larger three wave.
Right. You've got one, two, three, but then you've got, it's...

[Link],619 --> [Link],485

It's curving up the last, you know, the last one. I see what's going on. 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,

[Link],811 --> [Link],309

That means there's hidden structure you can't see over here. So either this is a
zigzag, an x-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. Remember I told
you you have two patterns near each other like this. It means the market actually
declined and went back up.

[Link],309 --> [Link],547

So you might have had a one, two, three, four, and five. Again, though, you could
have had a two-wave missing down here. This does not retrace enough of this move to
confirm this is a five-wave move. So it could be either corrective pattern or a
one, two, three that you can't see.

[Link],547 --> [Link],309

Are you saying that it's a it's not a confirmed

[Link],632 --> [Link],168

Well, you can't see on this chart because there's not enough detail. This is the
big picture, super simplified two and a half year chart. So then you would have to
go to a smaller time frame to start getting an idea. I thought I had that, but I
guess I don't.

[Link],168 --> [Link],137

Smaller time frame to analyze this to see if it really is a five-way 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. The fifth wave is
about 161% or more of the next longest wave. Fourth wave and the two wave clearly
don't overlap, they alternate.

[Link],137 --> [Link],913

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. But I used to have the
detailed version. I'm not sure what happened to it. Let me see if I have a monthly
chart that shows more detail.

[Link],277 --> [Link],356

I think the monthly chart gets way too complicated, but I don't even have it going.
I got rid of all those timeframes because, I mean, look at the complexity of this
chart. This is just going back to 2008. It doesn't go back down to 1982. So the
complexity of that chart was just massive, so I just gave up on it. I don't even
use it anymore. But I can assure you that that particular move that you're talking
about became a five-way move on monthly charts in real time and made sense on
monthly charts where it

[Link],851 --> [Link],056

Looked a little strange on the two and a half year chart because of missing price
action and because of simplification of data. Does that make sense? Yeah, that
makes perfect sense. Just a quick one on the last chart that you had with the C
wave ending quite higher up. Monthly S&P or six monthly? I think it was a monthly
S&P.

[Link],708 --> [Link],626

This is a neutral triangle structure. So the B wave didn't finish here, it probably
finished right about here.

[Link],985 --> [Link],141

And this decline would become the extended wave of the pattern. This E wave and
this A wave are virtually identical in time and complexity. You can see there's
overlap between B and D. There's alternation to the extreme where D is very big,
where B is small, but they do overlap. And so this is the explanation for this
hyper accelerated and exaggerated C wave. It's a little exaggerated, I have to say,
but all the evidence on larger charge suggests that this is what happened

[Link],141 --> [Link],985

It was easy to see when you got details on monthly charts that sort of reconfirmed
what the six monthly charts suggested but didn't produce as nice of a structure as
the monthly charts did. And then from there on six monthly charts we had another,
you know, nice corrective rally beginning from there.

[Link],985 --> [Link],891

And that's the reason why C has to finish at a much higher low. The recovery off
this low is too slow, took way more time to get back to this same level as it took
to go down to the low, so we couldn't consider this to be the start of the uptrend.
It had to be pushed further and further to the right. We needed some kind of
violent price action like this move, this retrace less than 61%, to be the
potential start of the new uptrend, not this much slower upward grind. Does that
make sense?

[Link],182 --> [Link],141

Right, yes. So say if we were in July 09 currently, would it be fair to say that,
okay, that sudden wave down, that would be, say, like an elongated flat where C
extends to 261% of wave? Yeah, it was a very difficult situation to understand what
all this was at the time, and I didn't

[Link],534 --> [Link],130

Quite know as much as I now know 12 years later about proper management of large
timeframes and complexity management, all those kinds of things that I've talked
about today in chapter three that are not actually listed in chapter three. 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? I think it's right around in here.

[Link],456 --> [Link],534

If any of you were with me at that time or got my service, I was calling for the
biggest, fastest market meltdown in almost world history and that it would be only
second to the depression of 1929.

[Link],943 --> [Link],936

And that's, you know, exactly what happened. I plotted out the entire thing and I
showed it getting back below the previous lows of 2002. So it was all mapped out
based on the wave structure and the bigger picture, not because of this shorter
term structure, but because of the much larger picture, it forced me into those
conclusions. But after that, this whole bounce was extremely difficult to
understand what all this was. 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 then.

[Link],398 --> [Link],847

But it was very difficult to understand what all this was, and it didn't become
clear until somewhere in this area that something must have finished at a higher
low, and that's when it started to become clear that maybe we had made the major
bottom and we were starting uptrend for a while. Right, it is quite complex to
follow. How long does it take to master all of these structures? Well, the...
[Link],427 --> [Link],018
The process to avoid this kind of confusion is to control complexity. This chart's
extremely complicated. I only make these connections so that you can see how the
monthly chart starting from a six monthly perspective connects. 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. So the next chart starts right here as
part of this highly complicated rally. So I'm only worried about this pattern after
wave X and what's happening since then.

[Link],018 --> [Link],175

But I only make these complicated charts just to allow us to quickly connect from
the larger chart to the smaller chart and say, oh, this is where wave C was, and
this is where the previous top was, and this is where the pattern starts. So we
have this advance here, and this is where the X wave is. So when I go to this
chart, you can figure out where this X wave is coming from.

[Link],568 --> [Link],168

That's the reason I do that, but I don't actually try to analyze a chart like this.
Because remember, controlling complexity is absolutely essential to good wave
analysis. This chart is not an exercise in controlling complexity. It's massively
complicated, which means it can't be interpreted. Right, okay. So say you had, you
know, for argument's sake, you had 13 monowaves on this chart. Would you start
your...

[Link],800 --> [Link],384

You know, would you start your count from the lowest low? Well, no, you have to
start your count from the point where the market produces violent counter-trend
action. So you can see here, you know, some people, probably most people would
probably start their count right off this low. But you can see this recovery is
slower and more complicated than the decline that it's retracing. So the real trend
started with the violent kickoff and the retracement that's less than 61%.

[Link],384 --> [Link],362

That's what you're always looking for is where did the real pattern, the new trend
begin. If you start every pattern off the low or the high, your wave counts will
never make sense. You'll never understand how patterns behave almost consistently
the same, that you won't get proper relationships, you won't get proper timing, you
won't get proper channeling. The most important thing you can do is learning where
to start your analysis. Without that, it's just not going to work.

[Link],012 --> [Link],813

We're going to have to call it quits. We're running into a time where I have to
take a break before my next class starts in 10 minutes. So there's a few questions
here that we didn't get to. So if y'all can write those questions down. It was from
Santosh and Nick and Pantham. If 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. So let's go ahead and call it a day and we will pick this up with chapter
four next week.