[Tasuki]

Waveslider, attached is my attempt to recreate bh's ES Wolfewave that looks unreliable. This raises a question I've been meaning to ask---for the very best WW patterns, should the extension of the line segment from point 1 to point 3 hit point 5? In an earlier post (permalink 33 on this tread), you said that my QQQQ daily chart had a point 5 that was "too deep to take the pattern seriously". Maybe that's true here for this ES pattern? More generally, though, should you be able to draw a straight line from points 1 to 3 and hit point 5? Is that part of the WW rules, or even a decent rule of thumb?

edit---damn, what happened to my chart? I'll try to post in following message.

[Tasuki]

hopefully my chart will show up this time. Definitely something fishy with TL servers...

[Tasuki]

Here is a beautiful WW on the ZG daily. Wish I'd seen this in real time. Note that points 1, 3 and 5 form something of an arc. No clue if this is significant in any way, whether it predicts the probable success of the WW pattern or if it's completely random. I'm still researching the Wolfe Wave, so I'm just tossing ideas out as I see them.

[waveslider]

Tasuki,
On your chart, points 1 and 3 should be connected. Point 5 is a violation of this line, it should at least touch it or the pattern is invalid.

I think that the pattern in the stock indices is still valid, but has not yet signaled an entry. There is a lot of volatility here, the purple line on my chart is a point where price should either accelerate to the downside, or reject and begin a move higher. It is an inflection point according to channel trading.

When the market moves below the 1-3 line too far, the corresponding target moves in the same direction. Unless price jumps quickly the other way. In that case it will often overshoot it's target, as it did the 1-3 line.

In the last chart an important point to note is that the #3 point should be lower than your #1 point, which would make the #5 point below the #3 point.

Keep throwing out ideas!

[Tasuki]

Thanks, waveslider,
OK, so the ZG chart (permalink #59) isn't a proper bullish Wolfe Wave, I gather, because point 3 should have been lower than point 1. I seem to be coming up with several "variations" on the Wolfe Wave theme that work out anyway...which makes me wonder how much latitude there is in this pattern.

Just sticking with bullish WW for the moment, I gather from what you said above that, if you extend the line segment from points 1 to 3, you should find that point 5 at least touches this downtrendling line, or breaks below it. Here's a question, and I can use the current chart of the ES (permalink 58) as my example--if the price action around point 5 keeps going down and down, as it has been doing this past week, how do you know when you've got a proper point 5? This is actually pretty important, because with a bullish Wolfe Wave, you're supposed to enter your position long after point 5 has been put in. How do you know when it's been put in? How do you know when to safely enter the position?

[waveslider]

Regarding your first statement, you are right, there are tons of variations of the WW. The pattern works for a reason, and as you understand that and see why it works, you will be able to isolate the good ones and toss out the bad. It aint easy and there are losers, but with patience and risk control its a solid way to trade - good risk reward profile.

For your question - Well, that's where your risk management and trade entry comes in. If you are a visual trader, you may want to at least wait for a downward sloping trendline to break.

What you should see as point #5 breaks is as I mentioned before, the action around the 1-3 line. This is an acceleration line. If the pattern is not valid, price should quickly move away from the line, with an attempt to retest from below. If you start getting this volatile sideways chop (as with this pattern) there is a good chance the thing will start working, but first it has to catch everyone off - guard.

Could happen today....

[bh_trade]

I was unsuccesful in my attempts to screen capture and post, but again am looking for clarification of your statement below. On the potentially bullish 60 minute ER2 pattern, we have been consolidating below the 1-3 trendline for several days now. Are you suggesting the consolidation below the line suggests the pattern ultimately works?

Originally Posted by waveslider »

Regarding your first statement, you are right,
What you should see as point #5 breaks is as I mentioned before, the action around the 1-3 line. This is an acceleration line. If the pattern is not valid, price should quickly move away from the line, with an attempt to retest from below. If you start getting this volatile sideways chop (as with this pattern) there is a good chance the thing will start working, but first it has to catch everyone off - guard.

Could happen today....

[waveslider]

Looks good. First target I see is the Andrew's line (grey in middle), next the yellow WW line.

Price formed a symmetrical triangle over the past few days (thin blue lines), breaking of the green line is further confirmation.

Damn, look at the US dollar go! As gold drops... Euro falling, Canadian $ and BP also, yen stays strong..