Wolfe

[bronxterp]

	Quote:	torero
	Ok, I see it. In classical TS, this is a rising wedge which usually means a quick bearish drop is imminent (if you draw the line from point 2 through point 4 along with 1 through 3, you'll see the wedge). This wedge has a target of going back to point 2. This is all in Edwards and Magee's book, very well explained.

And if you want to sprinkle in some Elliott Wave into this...

the rising wedge will only appear at the end of the 5th wave. If you're in the 5th wave and you start seeing overlapping subwaves, this is where doing the Wolfe projections can really pay off. These subwaves will only be 3 wave patterns...thus all the overlapping. Like you said, the drop that occurs after a rising wedge can be very sharp and quick.

[torero]

That's great! Now we have 3 theories that confirm this pattern, that means it's bound to have high probability of working!

[waveslider]

It really only works in a consolidation phase of the market. I believe point one is supposed to be the first pivot in the range, then point 2 is an attempt at a new high/low, which would fail (confirming range), then point 3 is a low below point 1 which also fails....

Basically it is a pattern whipsawing a lot of people, the more the better.

When there is momentum in a market, like there is here, the range is broken and price inverts into a larger wave rather than staying in a range.

[waveslider]

Here's another one that just played out on YM. Point 1 took place at 8:05 PST. The fake-out and entry was at 10:16 PST.
Approx. 30pt return.

[waveslider]

Here's another one that I was watching in the RUT. Pretty shallow but effective.

There are some important rules for this trade, but if they are satisfied the % profitable is very good. Best used in a non trending market.

#5 was the fakeout/failure

Connecting a line between #1 and #4 gave the target

[BlowFish]

If my understanding is correct point 5 can be outside the 1-3 line (even preferable). If that is the case do you wait for some trigger (reversal bar or something) to confirm point 5 and enter?

Cheers.

[waveslider]

Here's one I just took in ES. This is a 3 min chart.

The one point was a little tricky to notice. The important thing to note is that the 1 pt. occurred in congestion. It was actually an inverse point, the momentum that broke out of the contracting pattern started wave 1.

The target line was drawn between pts. 1 and 4. The trigger line was drawn using pts. 1 and 3. Entry was near pt. 5. If you just took a breakout it was worth 2 pts.

I took this trade because of a variety of factors; Lack of intraday trend, ER2 under-performance indicated that an uptrend was unlikely, range would continue. If you look at the volume on the bars I circled, you can tell the story and see where people got psyched out.

Probably would have been good to watch the TICK or TIKI to look for extremes.

Again, you had to have a trained eye to catch that pt. #1. Looking at balance and wave dynamics helps.

[BlowFish]

I think I have had a mini :lightbulb: moment. (Where's the bulb emoticon when you need it). Just kind of ties in with a couple of things that I had observed for myself and had even started to trade. I love market geometry its just so cool (when it works). Wouldn't mind seeing the odd failure too, lots to be leant from them.

Cheers.

EDIT: Yes the 1 point is kind of tricky

[BlowFish]

Just for fun I drew a couple of lines from what to my eye where more obvious potential one points. (bear in mind I am a chanell man at heart) Both 'work' but give an overshoot on 5. Am I right in thinking overshooting 5 is allowable and actually quite desirable?

Any comments on the other potential 1's?

Cheers.

[BlowFish]

oops file got left off