Wolfe

[waveslider]

Is anyone familiar with the wolfe wave?

The YM and NQ are showing pretty classic examples.

Here is a daily chart of YM, the up-trending blue line is the target line.

This is a high probability pattern in a ranging market, which YM certainly is in after the expanding pattern over the past 2 months.

If you are not familiar with the wolfe wave, google it - it is an effective pattern that happens frequently.

Any comments?

[BlowFish]

So target is the upsloping line P1-P4? (or does Wolfe label pivots from zero or with letters, all these different conventions!)

Cheers

[Dogpile]

nice, compare this chart to the bottom of pg 123 of Street Smarts book... they are basically identical. buy the reversal with a stop under this low is the trading strategy associated with it.

[waveslider]

Yeah it's a 12345 with the target line connecting 1 and 4. I think Rasche called it 3 indians, but bill wolfe coined the pattern originally. His site might be the best place to investigate it.
Understanding how this pattern works, the dynamics behind it, can spark some really interesting insights on how markets work.
This is a killer trade when it sets up.

[torero]

I still don't get it, the pivot 3-4 from the chart must be in the channel. There is no channel unless 2 lows and 2 highs are made. So 1 & 3 must exist to draw a line, so does 2 & 4. I got this rule from investopedia but does't make sense. I think this pattern is classified are broadening pattern in the classical TA.

[waveslider]

Torero, google "wolfe wave" to learn the pattern. Technically I would call it a descending wedge.

Point 2 is the recent high. Point five is the bar from friday, which penetrated the 1-3 line.

The target line is 1-4. Sorry, I should have labeled this chart better.

[waveslider]

When you start looking for these, they appear all over. ER2 just completed one, check it out....

Line 1-4 is the target line

[waveslider]

PS that was a weekly chart

[torero]

Originally Posted by waveslider When you start looking for these, they appear all over. ER2 just completed one, check it out.... Line 1-4 is the target line

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.

[waveslider]

Torero, you are correct about the rising wedge. Wolfe goes deeper than the wedge though. What happens is that the rising wedge is rejected and the market creates a target for itself when the geometry gets skewed.

I am not the best instructor, but there is info out there on this pattern. If you are a visually oriented trader, this is a very valuable pattern to know.
Guarantee you the professionals see this, it is a contrarian pattern so creates a quick and powerful move.

The trick is to be able to see it developing as it happens.

Here is another guy who sees it and understands. Bill Wolfe doesn't use fibs, and I don't think you need to either.
http://blog.fxinstructor.com/august-...-room-summary/

Go to Bill Wolfe's site to learn the pattern, if you google you will find it.

If YM holds this morning's lows (and the 1-3 line), then this pattern is set to run. The target is a good 800 points higher. Closing above today's open would be a good first confirmation, above Friday's high would be another.

The weekly ER2 chart I posted shows the power of this pattern as it is completed! Target hit perfectly. In consolidation patterns you start seeing these all over the place...