Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Recommended Posts

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?

Wolfe.jpg.13c84a291f51726862ff5d5c88f3f5d1.jpg

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites
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.

Share this post


Link to post
Share on other sites

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-1-2007-ny-live-trading-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...

Share this post


Link to post
Share on other sites
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.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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

5aa70e01bb89f_WWRussell2k.jpg.85df35c2a16bc484f6f0836b30b6a53d.jpg

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

Wolfe1029.jpg.8acab460b007ed7ad1542492c49e4c89.jpg

Share this post


Link to post
Share on other sites

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

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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

5aa70e17b98e2_YM12-0710_30_2007(4Min).thumb.jpg.2baed54413f15aa1eed65d77864ff25a.jpg

Share this post


Link to post
Share on other sites

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.

5aa70e17be18c_YMon1030.jpg.c1bb2230c525ec64fc5ed8e46fb631c3.jpg

Share this post


Link to post
Share on other sites

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?

Share this post


Link to post
Share on other sites

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.

5aa70e1887722_ER2potentialWW.thumb.jpg.6e3b50b35f0a02ab6d62d7d29f391fa7.jpg

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Crypto hype is everywhere since it also making new riches as well, i however trade crypto little as compared to other forex trading pairs.
    • The ewallets can be instant withdrawals like skrill etc or they can also pay through crypto but not tested their crypto withdrawals so far.
    • I noticed that this broker has also started crypto cfds to trade. Crypto fever is almost everywhere in my opinion and the traders making good sums of money too.
    • MDLZ Mondelez stock, nice rally off the 64.18 support area at https://stockconsultant.com/?MDLZ
    • Date: 27th March 2025.   SNP500 Erases Gains as Trump’s Aggressive Trade Policy Shakes Markets   The SNP500 fell 1.35% on Wednesday wiping off the gains from the week. The decline is primarily due to fears of the upcoming US trade policy on April 2nd and beyond. In the President’s latest speech investors heard Trump confirm he looks to tax foreign cars with 25% tariffs and will add retaliation tariffs on Canada and the EU if they look to retaliate. The US Latest Comments On Global Trade The main concern for investors is the US President’s latest comments on the EU potentially collaborating with Canada. The two countries are aiming to push the US into a more favourable trade agreement. Donald Trump states that “if the EU works with Canada in order to do economic harm to the USA, large scale tariffs far larger than currently planned will be placed on both”. Up to now, both Canada and the EU have advised markets that they will retaliate. As a result, investors fear how these policies can trigger lower consumer demand, higher inflation and even a potential recession. The latest consumer confidence fell for the fourth day to 92.9, missing the 94.2 forecast. The economic outlook dropped to 65.2, a 12-year low, staying below the 80.0 recession warning level. However, the Federal Reserve so far in 2025 is advising the US economy remains stable despite the uncertainties. Furthermore, the US confirms they intend to impose a 25% tariff on all car imports and essential parts, including engines, transmissions, and electrical components. Many countries have already voiced their concerns over this decision.   Where Automakers Build Cars Sold in America   The Federal Reserve and Inflation Chicago Fed President Austan Goolsbee stated yesterday that policymakers may postpone monetary easing for 12 to 18 months due to market uncertainty. He also continues warning that rising inflation expectations could complicate efforts to slow it down. Another member to voice concerns is Alberto Musalem, a US economist and banker. The risk of US inflation remaining above the Fed’s 2% target, or even increasing, continues to grow, with higher import taxes potentially driving sustained price pressures. In the latest month, US inflation fell from 3.00% to 2.8% which is positive for the stock market, but only if it continues to fall towards 2.00%. There is currently only a 10% chance of an interest rate cut in May 2025 according to the Chicago Exchange. Economists advise the upcoming data will be vital and can significantly influence the risk appetite of the market. Traders will be focusing on today’s Final US GDP and tomorrow's Core PCE Price Index. If tomorrow’s PCE Price Index reads more than 0.3%, the stock market could quickly witness renewed pressure. SNP500 (USA500) - Technical Analysis Regardless of the above fundamental factors which are triggering the recent decline, the SNP500 has risen 0.35% during this morning’s Asian session. The bullish corrective wave currently measures 40% of yesterday’s bearish impulse wave. Though traders should also note that global indices including within the EU and Asia are continuing to decline.   SNP500 (USA100) 1-Hour Chart   The price in a 15-minute timeframe remains below most trend lines and Moving Averages. In addition to this, the price is again dropping below the neutral level of the RSI and the VWAP. If the price regains downward momentum and falls below $5,701.98, many traders may consider bearish momentum to be regaining ground. At this point, sell signals potentially can materialize. Further adding to the indications of downward price movement is the VIX index which is currently trading 0.60% higher. The higher the VIX index the lower the appetite there is towards the US stock market. Lastly, the US 10-Year Treasury Yields continue to rise adding further pressure on the stock market. The 10 Year Treasury Yields are currently trading 25 points higher. Key Takeaway Levels: The SNP500 dropped 1.35% as investors reacted to fears surrounding the upcoming US trade policy changes on April 2nd. This includes a potential 25% tariff on foreign cars and retaliatory tariffs against Canada and the EU. Fed officials warn that inflation risks remain high, with import tariffs potentially driving further price pressures. Inflation recently fell to 2.8%, but concerns persist about whether it will reach the Fed’s 2% target. Traders are closely monitoring upcoming US GDP and Core PCE Price Index data. If PCE exceeds 0.3%, stocks could face renewed pressure. Despite a slight rebound in the SNP500, indicators like RSI, VWAP, and the rising VIX index suggest bearish momentum could return, particularly if the index falls below $5,701.98. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.