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

waveslider, it looks like that ER 60 Wolfe Wave isn't going to work out, or at least I would have been stopped out by now if I'd been in it. Which raises the question, How well do WW work? As you may know, Tim Morge of medianline.com says he's done careful statistics on his pitchfork setups, and claims that they work pretty close to 80% of the time. Do you know if WW are as good as this? Thanks.

Share this post


Link to post
Share on other sites

I don't know of any stats, but observing them they work with a high probability - IF - the trade is managed well. Same with pitchforks. It's hard to quantify just like pitchforks, since there are various entries/exits that can be used.

Personally, the way I am handling it is by biasing a mechanical system I run to the upside, when above the trigger line.

If I was trading with discretion, I would wait for the trendline break to put on an initial position. Then I would add to that on a pullback.

So if I personally was trading this pattern with discretion, I wouldn't be in yet till that TL breaks. It could still very well work, but the best place to be currently, as far as this trade goes, is cash. This market is oversold and due for a bounce regardless.

I respect Tim Morge's work quite a bit, but I don't think you can quantify pitchforks that well, they are pretty subjective.

If I had to choose 2 methods to trade with discretion, I would use the WW for ranges, and the pitchfork for swinging/trending markets. The most critical thing is risk/trade management by scaling in/out, using multiple time frames.. etc..

Share this post


Link to post
Share on other sites

Waveslider:

 

I meant to post this last night, but got preoccupied.

 

About the potential bullish ER2 pattern: the ES showed a similar potential the other day but the recent weakness has kept prices below the trigger line for 2 days now. My experience has been that when that happens, the pattern becomes unreliable, ie higher than normal chance of failure. ER2 is also hanging out below the trigger line, although not as drastically as ES.

 

Curious to hear your thoughts.

Share this post


Link to post
Share on other sites

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.

Share this post


Link to post
Share on other sites

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.

5aa70e1e77aa7_ZGdailyarcpattern135.thumb.png.d0effe8a3793cff4a27e2ebf50f9ffe9.png

Share this post


Link to post
Share on other sites

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!

Share this post


Link to post
Share on other sites

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?

Share this post


Link to post
Share on other sites

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....

Share this post


Link to post
Share on other sites

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?

 

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....

Share this post


Link to post
Share on other sites

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..

5aa70e1e972b4_ER2monday.thumb.jpg.8ef88cb6e7e831ea96ba328d786fe700.jpg

Share this post


Link to post
Share on other sites

Bh-trade:

Yes consolidation below that line does work, especially more violent sideways chop. What you don't want to see is a gap lower (below the line) that just keeps running. That means that the 1-3 line is an acceleration line and the 1-3 line is probably the halfway mark to a larger move lower. Multiple touches of the line means the acceleration isn't happening.

Share this post


Link to post
Share on other sites

Market touched the green entry line and faded back one more time. Interesting that the Russell is holding its lows while the other indices fall. This is bullish.

 

By taking out Friday's high and low, ER2 is forming an expanding pattern. Monday was not a trend day on the daily chart, this is more sideways action trying to shake people out.

 

I like the looks of a slightly different #1 point on this pattern more and more. The reason is because of the way the 1-4 line matches up with multiple peaks. Andrew's line is still looking good for a primary target. This trade needs to form a higher low, break trend lines , and get over 785.9 level marked in black..

er2monday2.thumb.jpg.4eaff56fb9d34b48e4839d847493b488.jpg

Share this post


Link to post
Share on other sites

waveslider, you asked me to throw out more ideas, so here goes. Attached chart probably just displays my ignorance. Is this a WW that failed, or is it not a proper WW setup (and if not, why?). I suspect that point 2 isn't a good point 2 because of the higher prices directly to the left, so it's not really a near term top--or is it? How much of a near term top does point 2 have to be? Are there other reasons why this isn't a good setup (other than the fact it failed--even market geometry patterns fail sometimes)?

5aa70e1fae5dd_putativeWWthatfailedonAUDJPY.thumb.png.10aa80cf3fff43823a18391ba450c06a.png

Share this post


Link to post
Share on other sites

Tasuki, see how that when price hit that #5 pt., it started accelerating and didn't even look back? Right in those 2 bars where #5 is, the tails hardly overlap - this was a market in motion. What you want is a failure to accelerate - and some sideways action. Aside from that, this was a very valid pattern - good eye!

 

The #2 pt ideally would have been an attempt to move out of congestion and that would have invited some longs that would have got washed by pt. #5. That's part of the psychology I explained earlier. But you got it pretty close! The move from pt2 to pt3 was an expanding pattern indicating a range.

Share this post


Link to post
Share on other sites

waveslider, thanks SO much for your lessons and your patience. How about this next one (see attached)? This would seem (to me) to have everything going for it:

1) waves pretty even

2) point 1 in a range

3) point 2 definitley was an attempt to break out of congestion and encouraged buyers who undoubtedly got washed out at point 5

4) point 3 lower than point 1

5) point 5 seems, so far at least, to be bouncing off the 1-3 extension line

6) line 1-4 has multiple touches

7) from a fundamental perspective, the semiconductors were the biggest disappointment in the last rally and they are both oversold and underperforming and definitely ripe for a bounce.

 

So, whaddya think? Have I got my ducks in a row this time?

5aa70e1fb80f3_semiweekly.thumb.png.a0a8fb265027c9c64a43794e132eb64d.png

Share this post


Link to post
Share on other sites

yeah I think you got this one nailed. I'm sure there's other confirmation on that chart too. It looks like a pretty major double top on one hand, but its an expanding pattern, so really it's just going sideways with increasing volatility.

If I were in this trade long I would be careful of volatility dying out - there's a chance this is a major top.

Now you understand the pattern. You can start looking for the nuances. For example, I like to see the bars between the 1 and 3 pts. to be more than the bars between the 3 and 5 pts.

I haven't quantified this, but I think it is preferable..

WW is not perfect, but the more you look at them the more you will see the how and why, and begin to understand the psychology and balance in the pattern..

Glad you are learning. Do you trade futures much? I noticed a pretty nice one in ES today. My chart program is crashing a little right now, maybe will post later..

Share this post


Link to post
Share on other sites

Attached is a five minute chart of today's ES action. There was a semi-OK Wolfe Wave that semi-failed, and I think I know what happened.

Here's my analysis (comments, please):

1) point 1 was within a range

2) point 2 looked like it was going to break out of the range, and sucked in new buyers---notice, however, that it didn't break above the morning's high--it would have made for a stronger pattern if it had.

3) point 3 was lower than point 1, albeit not by as much as I would have liked

4) the line from point 1 to point 4 was a bit steep, methinks.

5) point 5 broke below the line from points 1 to 3, but here's the major weakness of the pattern as it set up--point 5 didn't scare people enough--it held the support line (dotted red line). The pattern would have been much stronger if it had dipped below that support--doubtless lots of traders held on

6) the place to buy would have been the break of the dotted yellow line, and your first target would have been the extension of the line from points 2 to 4 (thin green line). I haven't done a survey yet, but I'm wondering if that line from points 2-4 should maybe always be your first target (take off part of your position?) when trading a Wolfe Wave. Experienced Wolfies, your comments would be appreciated.

7) Ultiimately, the pattern failed to meet its target (the extension of the line from points 1 to 4), but it still went part way. I'm wondering how often my putative first target is hit, and then the price pulls back?

5aa70e1fd5cab_ESWolfeWavesemifailed4.thumb.png.9d527764c846b9d07491778169eddeea.png

Share this post


Link to post
Share on other sites

I think you are right on all points. This was a failed pattern, and that target line was a little too steep - but those ones work some time, just lower probability. Using the top of the channel is a good 1st target, setting remaining position at breakeven.

 

Here's that pattern in ES from yesterday... 233 tick chart

MyScreenHunter.thumb.jpg.7c9f69ccbf05d43b5381a93dfec63dd1.jpg

Share this post


Link to post
Share on other sites

My pleasure posting charts, it's nice to see eye to eye with someone else. I'd put #3 at 3a, since that was the first one. Although the 3c is lower, it doesn't penetrate the acceleration line.

You had to be quick to see this one in real-time, but the way the #4 and #5 pts came so close together, you could see that price was just trying to shake players out. Plus, there was a bullish bias to the day.

 

I'd say the first thing I look for is a point #2 and #3, and to identify that these are occurring in a range. Then wait the trap is set, a variety of things can happen next, but these are the first clues to look for to set up the pattern.

 

Also important is observing volatility in the market. This pattern comes along when the market is trying to shake out short term traders, there should be some other fake-outs nearby. You can see quite a few in the period between points 3 and 4. Then the shake out gets bigger (volatility still intact), and there you are, waiting for the final blast. When Joe trader gets stopped out below the pivot, it's just about time for action.

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

    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Hello citizens of the U.S. The hundred year trade war has leaked over into a trading war. Your equity holdings are under attack by huge sovereign funds shorting relentlessly... running basically the opposite of  PPT operations.  As an American you are blessed to be totally responsible for your own assets - the govt won’t and can’t take care of you, your lame ass whuss ‘retail’ fund managers go catatonic  and can't / won’t help you, etc etc.... If you’re going to hold your positions, it’s on you to hedge your holdings.   Don’t blame Trump, don’t blame the system, don’t even blame the ‘enemies’ - ie don’t blame period.  Just occupy the freedom and responsibility you have and act.  The only mistake ‘Trump’ made so far was not to warn you more explicitly and remind you of your options to hedge weeks ago.   FWIW when Trump got elected... I also failed to explicitly remind you... just sayin’
    • Date: 7th April 2025.   Asian Markets Plunge as US-China Trade War Escalates; Wall Street Futures Signal Further Turmoil.   Global financial markets extended last week’s massive sell-off as tensions between the US and its major trading partners deepened, rattling investors and prompting sharp declines across equities, commodities, and currencies. The fallout from President Trump’s sweeping new tariff measures continued to spread, raising fears of a full-blown trade war and economic recession.   Asian stock markets plunged on Monday, extending a global market rout fueled by rising tensions between the US and China. The latest wave of aggressive tariffs and retaliatory measures has unnerved investors worldwide, triggering sharp sell-offs across the Asia-Pacific region.   Asian equities led the global rout on Monday, with dramatic losses seen across the region. Japan’s Nikkei 225 index tumbled more than 8% shortly after the open, while the broader Topix fell over 6.5%, recovering only slightly from steeper losses. In mainland China, the Shanghai Composite sank 6.7%, and the blue-chip CSI300 dropped 7.5% as markets reopened following a public holiday. Hong Kong’s Hang Seng Index opened more than 9% lower, reflecting deep concerns about escalating trade tensions.           South Korea’s Kospi dropped 4.8%, triggering a circuit breaker designed to curb panic selling. Taiwan’s Taiex index collapsed by nearly 10%, with major tech exporters like TSMC and Foxconn hitting circuit breaker limits after each fell close to 10%. Meanwhile, Australia’s ASX 200 shed as much as 6.3%, and New Zealand’s NZX 50 lost over 3.5%.   Despite the escalation, Beijing has adopted a measured tone. Chinese officials urged investors not to panic and assured markets that the country has the tools to mitigate economic shocks. At the same time, they left the door open for renewed trade talks, though no specific timeline has been set.   US Stock Futures Plunge Ahead of Monday Open   US stock futures pointed to another brutal day on Wall Street. Futures tied to the S&P 500 dropped over 3%, Nasdaq futures sank 4%, and Dow Jones futures lost 2.5%—equivalent to nearly 1,000 points. The Nasdaq Composite officially entered a bear market on Friday, down more than 20% from its recent highs, while the S&P 500 is nearing bear territory. The Dow closed last week in correction. Oil prices followed suit, with WTI crude dropping over 4% to $59.49 per barrel—its lowest since April 2021.   Wall Street closed last week in disarray, erasing more than $5 trillion in value amid fears of an all-out trade war. The Nasdaq Composite officially entered a bear market on Friday, sinking more than 20% from its recent peak. The S&P 500 is approaching bear territory, and the Dow Jones Industrial Average has slipped firmly into correction territory.   German Banks Hit Hard Amid Escalating Trade Tensions   German banking stocks were among the worst hit in Europe. Shares of Commerzbank and Deutsche Bank plunged between 9.5% and 10.3% during early Frankfurt trading, compounding Friday’s steep losses. Fears over a global trade war and looming recession are severely impacting the financial sector, particularly export-driven economies like Germany.   Eurozone Growth at Risk   Eurozone officials are bracing for economic fallout, with Greek central bank governor Yannis Stournaras warning that Trump’s tariff policy could reduce eurozone GDP by up to 1%. The EU is preparing retaliatory tariffs on $28 billion worth of American goods—ranging from steel and aluminium to consumer products like dental floss and luxury jewellery.   Starting Wednesday, the US is expected to impose 25% tariffs on key EU exports, with Brussels ready to respond with its own 20% levies on nearly all remaining American imports.   UK Faces £22 Billion Economic Blow   In the UK, fresh research from KPMG revealed that the British economy could shrink by £21.6 billion by 2027 due to US-imposed tariffs. The analysis points to a 0.8% dip in economic output over the next two years, undermining Chancellor Rachel Reeves’ growth agenda. The report also warned of additional fiscal pressure that may lead to future tax increases and public spending cuts.   Wall Street Braces for Recession   Goldman Sachs revised its US recession probability to 45% within the next year, citing tighter financial conditions and rising policy uncertainty. This marks a sharp jump from the 35% risk estimated just last month—and more than double January’s 20% projection. J.P. Morgan issued a bleaker outlook, now forecasting a 60% chance of recession both in the US and globally.   Global Leaders Respond as Trade Tensions Deepen   The dramatic market sell-off was triggered by China’s sweeping retaliation to a new round of US tariffs, which included a 34% levy on all American imports. Beijing’s state-run People’s Daily released a defiant statement, asserting that China has the tools and resilience to withstand economic pressure from Washington. ‘We’ve built up experience after years of trade conflict and are prepared with a full arsenal of countermeasures,’ it stated.   Around the world, policymakers are responding to the growing threat of a trade-led economic slowdown. Japanese Prime Minister Shigeru Ishiba announced plans to appeal directly to Washington and push for tariff relief, following the US administration’s decision to impose a blanket 24% tariff on Japanese imports. He aims to visit the US soon to present Japan’s case as a fair trade partner.   In Taiwan, President Lai Ching-te said his administration would work closely with Washington to remove trade barriers and increase purchases of American goods in an effort to reduce the bilateral trade deficit. The island's defence ministry has also submitted a new list of US military procurements to highlight its strategic partnership.   Economists and strategists are warning of deeper economic consequences. Ronald Temple, chief market strategist at Lazard, said the scale and speed of these tariffs could result in far more severe damage than previously anticipated. ‘This isn’t just a bilateral conflict anymore — more countries are likely to respond in the coming weeks,’ he noted.   Analysts at Barclays cautioned that smaller Asian economies, such as Singapore and South Korea, may face challenges in negotiating with Washington and are already adjusting their economic growth forecasts downward in response to the unfolding trade crisis.           Oil Prices Sink on Demand Concerns   Crude oil continued its sharp slide on Monday, driven by recession fears and weakened global demand. Brent fell 3.9% to $63.04 a barrel, while WTI plunged over 4% to $59.49—both benchmarks marking weekly losses exceeding 10%. Analysts say inflationary pressures and slowing economic activity may drag demand down, even though energy imports were excluded from the latest round of tariffs.   Vandana Hari of Vanda Insights noted, ‘The market is struggling to find a bottom. Until there’s a clear signal from Trump that calms recession fears, crude prices will remain under pressure.’   OPEC+ Adds Further Pressure with Output Hike   Bearish sentiment intensified after OPEC+ announced it would boost production by 411,000 barrels per day in May, far surpassing the expected 135,000 bpd. The alliance called on overproducing nations to submit compensation plans by April 15. Analysts fear this surprise move could undo years of supply discipline and weigh further on already fragile oil markets.   Global political risks also flared over the weekend. Iran rejected US proposals for direct nuclear negotiations and warned of potential military action. Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   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.   Andria Pichidi 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.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
×
×
  • Create New...

Important Information

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