SECTION 2

SYMMETRY WAVE The Method Itself

CHAPTER THREE

Rules For The Symmetry Wave Method

Symrnetry Wave may initially appear to be somewhatdifficult, so it is important that you read the next three chapters carefully as they tend to clarify each other and make the overall concept ruite understandable.

The Syrnmetry Wave Method is a system of rules for interpreting price fluctuations in stocks, stock averages, and futures markets, and it is a perspective builder. The method is both general and precise in its nature. In a general sense it helps us to understand overall market behavior. In its precision, the method not only, predicts trend reversals, but often generates buy and sell signals with pinpoint accuracy.

Everything in nature has a repetitive pattern and a cycle. Without repetitive patterns, chemistry and physics would not be possible. Cycles abound in our fives, i.e., night and day, heat and cold, birth and death.

In stock and futures markets, an up move in price is followed by a down move. This cycle is repeated in different magnitudes and manifests itself as waves on charts. The magnitude ol these waves establishes patterns.

The Symmetry Wave Method singles out retracement waves of similar magnitude and groups them under the same hierarchy. The above rule is the essence of the Symmetry Wave Method. This one simple role organizes the slock and futures markets, eliminates guessing wave counts, lets the market reveal its own intentions rather than fitting ihe markets to a theory, establishes a clear perspective, and reveals trend and trend reversals. It is a trading tool, and it follows the markets own rhythms. Th is method lets a market unfold any way it wishes. A trend may develop in five, seven, nine, or eleven waves. It is irrelevant how many waves there are. Our concern is to match waves that have the same magnitude and to trade off of them.

NOTB: When following the examples given in this bool(, it will he important for you to refer to the illustrations often and properly follow the wave ideiHifications. For example, we wiHbe referring to wave 2 being matched by wave 4 and subsequently wave (2) being matched by wave (4). Therefore, to get the gi>( of what« being said, it is import.int to distinguish, for example, belween wave 4 and wave (4). Also, mail examples use up!i end, buiali rules apply todownueiid as well.

Illustration 3-1 identities each wave, and Illustration 3-2 shows proper labeling for this set of symmetrical wa-ef. during jrniptrend. liluslralioti 3-3 depicts a downtrend with proper wave ideiitificalion.

The American 11 Dictionary deitnea symmetry as: "iieauty as a result of balance or harmonious arrangement." As the word "symmetry" implies, the Symrtietry Wave Method is the grouping of waves that are similar in size, thus creating a balanced way of monitoring the unfolding of a market- Markets have a rhythm, and the Symmetry Wave Method defines the balanced rhythm and counting of that rhythm.

Illustration 3-1

Only one level of hierarchy

Illustration 3-2

THESE ARE THE RULES OF THE SYMMETRY WAVE METHOD:

Trend Wave and Retracement Wave

All price fluctuations fall into two categories: a price fluctuation, or wave witli trie trend, is called a trend wave; and a price fluctuation against the major trend is cal led a retracement wave (see Illustration 3-4 through 3-6). Trend waves are always labeled with odd numbers, and retracement waves are always numbered irsing even numbers. It is by contrasting the retracement waves to the trend waves that we start to organize the markets and to build a perspective.

Illustration 3-4