Wolfe

[waveslider]

Ah ha! you have a pretty good grasp on market geometry! What you have identified is a balance point that those lines are shooting through.
Your point #1 is equally valid, I was being conservative with my point#1. In essence, my point#1 gave the first target, the other 2 you had were the next targets.
Personal preference note:
My 1-3 line was downward sloping for a bullish target. I like these wedge failures.

Do you use Andrew's lines, Blowfish?

Also - there's a great book on channelling by a guy named M. Parsons called Channel-Surfing. A cheesy cover but very good book.

[vae victis]

hey guys,

I am new to this posting thing so please bear with me if I don't get it quite right the first time (trying to become a reformed 'lurker').

I am very intrigued by Wolfe Waves, and been trying to learn about them for the past few days. I would like to post a 4 minute chart on todays YM. The 4 minute TF is new for me (usually use 1 & 2 min), but wanted to try something new - swings instead of scalps maybe. I drew this WW in real time on the 1120 (central) bar. As indicated on the chart, 13840 looked like a good entry so I entered a limit order at that level. Based on the WW that I drew, I realize that looks to be a bit early/high, however, it looked like I would only take about 9-10 ticks of heat on the failure of this pattern. As it turned out, it missed me by 2 ticks, no big deal as I was happy that I was able to see this in real time and it appeared to be a valid pattern to me, UNLESS....my perceptions on this particular chart are completely wrong.

I have some limited experience with various markets but I consider myself a beginner at trading and I would be grateful for any feedback on this.

Thank you very much,
VV

[waveslider]

There was a pattern here, but unfortunately you didn't see it according to the chart you posted.

If you use a conservative entry, the trade was not activated since the cyan line went unbroken. If you fade the entry this was a pattern failure.

It was a pretty ugly one all around. If point 5 would have appeared a little earlier it probably would have worked. The target line was the line connecting 1 and 4.

I advise you to go to wolfe's website and study the pattern again.

[BlowFish]

I used to use pitchforks a year or two back they are a phenomenal tool. In the end I went back to using plain old hand drawn lines - channels in particular. They just 'speak to me' more i think.

Vae I wont comment on Wolfe as all I know is what I have read that is freely available. The thing is once you start to see geometry its everywhere, Then the tools don't matter so much its just a question of using them consistently.

You mention balance points Wave, ....ever come across a guy called Michael Parsons?

[waveslider]

Parsons is an good guy and hard working teacher. He has an excellent book on channel trading which I would recommend to any visual type trader...

Potential pattern developing in ER2. A volatile reversal off of the magenta line would spell a move to the yellow line. Lowered volatility and drifting lower means the pattern is not valid and a move lower to about 772. Blue line is currently support. I'll post this same chart later to see how it all works out.

The lines below are just volume and a jurik MA of volume.

[BlowFish]

A question if I may. Can we imagine a channel line (drawn parallel to 1-2 through point 3). Is it important that point 4 does not make it to that outside channel line? The reason I ask is that (I find) this is quite a useful observation in and of itself and shows potential weakness.

Cheers,

[waveslider]

HI blowfish,

I think you mean a channel line b/w points 1 and 3. Yes I agree, if this is truly a top, then the pattern is not valid and momentum will carry the price down below the 1-3 line. The 1-3 line would then act as resistance and I would use the 2-4 line as the accelerated channel line. ( I think you understand this since you know channels, sorry for anyone else who is lost ).

Basically what this is is a descending wedge pattern. When the lower line of the wedge breaks, 2 things can happen.

1. Price accelerates in a downward direction and a quick move down is made (down trend is intact).

2. Price tests lower line and rejects. In that case a dramatic reversal is made fueled by the short covering of those who sold short on the break down, and those re-entering that lost money on the previous attempt higher at point #1. (This means the market is locked in a range).

Sorry if this is a ramble, need to drink some water and coffee to wake up.

[BlowFish]

That's not quite what I meant I have added and outside/righthand line to your last drawing. Point 4 fails to meet it (which can indicated weakness).

My question is for a 'classic' WW set up is it madatory that point 4 fall short of that outside parallel channel line (the cyan squiggles) I think you still provided the answer when you said that we should see a wedge? (i.e. the naswer is yes) So if point 4 had been on that outside channel line does that invalidate the pattern?

Cheers.

[waveslider]

Bfish can you post a chart? Think I understand what you are asking and, yes that #4 pt should be well below the outside channel line. There should be a wedge formation.

Here's this same chart again, with more price data now.

This is what is going on. Currently the market is in balance, the axis is the yellow line on the chart.

Notice how the yellow line aligns with pivots on both sides of where it crosses price. Then notice how the line splits the pattern at the 50% mark.

The purple line below is a place where the market could accelerate lower. It is below the pivot #3, so those using that point as a natural location for their stops on a long position are going to sell here. Momentum players will jump on for what looks like a "matching move" lower (Many famous technicians mention matching price moves).

What often happens is that the move lower is rejected and, like a rubber band stretched in the wrong direction, it shoots higher for one last touch of the yellow line.

This happens in a volatile, ranging market. In a market where volatility is dying, a descending triangle occurs, and a move lower eventually comes.

So, bottom line with this one is that if price does a quick move lower and is rejected, the pattern dictates a move to the yellow line. If the market holds friday's lows, it will likely fill the gap from Thursday to Friday, and then re-test. This would invalidate the pattern.

Last option is for a move lower that accelerates below the purple line. The natural target for that would be a matching move lower to 763 (I think probably lower).

[Tasuki]

See attached. I'm just starting to study Wolfe Waves, but I think the attached chart is an example of a successful one.