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Thought I'd repost waveslider's perfect Wolfe Wave from Tuesday, November 13. ES 233 tick chart. Might be useful to see it in a wider context, to show just why it's as good an example as it is. See notes on chart.

5aa70e20b73d6_wavesliderperfectWW20071113notes.thumb.png.597542790c1b3110bcefe3cf5b9f4133.png

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Interesting, waveslider. The attached chart has a similar pattern vis a vis point 1, and a few other things going for it, most notably point 2, but a few marks against it too, especially that poor show for a point 5. Still, it did work out, which counts for something.

 

This raises an interesting question. There's a thread on TradersLab which deals with Volume Spread Analysis (VSA), and many people on the thread have obvserved that VSA doesn't work all that well on very short timeframes. In fact, both Pivotprofiler and I have posted comments saying that VSA seems to work best on timeframes of 15 minutes and above. SO, my question is, with Wolfe Waves, do they work best on a certain kind of chart? I seem to have quite good luck finding them on 233 tick charts on the ES. Somewhat less luck with minute charts. As most traders know, the patterns created by tick-based charts can be quite different from the patterns seen on minute-based charts. I wonder if maybe Wolfe Waves would benefit from the fluidity that's usually seen with tick charts (or even volume based charts, perhaps). Just wondering.

5aa70e22277fe_ES233tick20071115.thumb.png.d620dfd41162c2713a77809813a72898.png

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wavelsider, I did a comparison of the last two charts you posted (permalinks #73 and 81) and I noticed something interesting--in both cases, the wave lengths were not even throughout the formation of the Wolfe Wave. That is to say, in both cases there were three pivots that formed quickly, creating sharp, steep moves in price, but there was also a slow step as well, in which the price meandered and the pivot formed much more slowly. In one case, it was the wave from points 3 to 4, and in the other case, it was the wave from points 2 to 3--so it's not always at the same place.

 

I remember reading somewhere that the best Wolfe Waves occur when the waves are symmetrical and flow in a regular pattern. Well, it doesn't look as if that's exactly correct. At least in these two examples, there was one slow step in the process.

73.thumb.png.051587aa6ebfd9f049e04bcd15f38a75.png

81.thumb.png.9285eb841d873153e73a2be1bb090c9c.png

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I agree with you that the legs being of equal distance is not critical. Remember though that you are looking at tick charts in these examples, they don't match up with time always.

I did notice that in your first chart, the distance between 2 and 4 is about the same as distance from 3 to 5. This is another timing method.

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Here's one on a 466 tick ER chart. I chose point three because this was the momentum high. It was the natural point to use as a trend line. This market is having a hard time going lower, but it's doing a good job of shaking out longs.

 

A triple bottom (rare) may have been confirmed with the late afternoon's failure to close lower. I bought this market at the close of yesterday, holding..

MyScreenHunter.jpg.6f41f44371d9109786ba39560db906b7.jpg

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See my comments in permalink #31 on page four of this thread. The attached chart is another example of a Butterfly which almost looks like a Wolfe Wave. Maybe it could be a variation. I won't be surprised if Monday's trading brings the ES up to the target at point 6 around 1490.

 

BTW, the pattern outlined in dark green on the chart is a classic "Butterfly" championed by Larry Pesavento and others. It definitely has a higher probability of success in some markets more than others. I'm not sure why that is--no doubt due to quirks in how different markets behave. I presume this would hold for Wolfe Waves, but I haven't done enough of a study yet to be able to tell.

 

I think I remember Bill Wolfe's website saying that the Wolfe Wave works in all markets.....the rate of success in one market vs. another would be a very interesting topic to investigate. As I pointed out in an earlier post, I also suspect that these patterns work better on tick or volume charts, but again, this needs to be researched.

5aa70e26cad9b_ESButter.thumb.png.952685b0a283fb0410effda36308bd11.png

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How did you draw those cool dotted triangle things?

 

I haven't done that much work on Butterfly, but I think that understanding market geometry would aid in finding successful patterns.

 

Is the butterfly generally a sort of whipsaw move?

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Waveslider,

The cool dotted triangle things are just the work of the Butterfly indicator drawing out its pattern on my Tradestation chart.

Whipsaw? Well, I guess so. The Butterfly, like its parent, the Gartley, has specific Fibonacci ratios for each point in its pattern. The classic numbering pattern for these patterns is X-A-B-C-D (which corresponds to the Wolfe Wave numbering of 1-2-3-4-5). I have a friend who's eyes are so good at seeing patterns that he routinely trades the move from C to D (4 to 5, if this were Wolfe), but the originators of these patterns (Gartley and Butterfly) traded them after point D (point 5) was put in, much as Wolfe Waves are designed to be traded after point 5 has formed. The most interesting part of the Wolfe Waves, for me at least, is that there is an understanding of the psychology behind the formation of each point. I'm not sure this psychology was developed as extensively for the Gartley and Butterfly, but maybe I just haven't done enough reading. I have met Larry Pesavento on several occasions, and I don't remember him discussing the psychology in as much detail as Bill Wolfe did for his waves (and thanks again Waveslider for elucidating that psychology for me--extremely helpful).

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I think pensaveto places more importance on Jupiter than crowd psychology, if i remember right!

Anyway - - yeah in the short term it's even less psychology as it is finding where the stops are, running them to create liquidity, and then heading in the direction of the higher time frame trend.

I could see trading pt 4-5 because its usually the most violent part of the move... and then you know where to reverse or exit..

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waveslider, that's a beaut of a Wolfe. Pretty oscillator below--nice to look (cool colors) and it also seemed to catch that divergence beautifully. Care to tell us what the oscillator is?

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Oh yeah that's the TRIX (it's just price smoothed exponentially 3 times). It's the canned tradestation one.

 

I like to put 2 lengths down, I have a 9 and 13 there.

 

I wouldn't use it for trade entries, actually I've tested it and nothing I could come up works, but that's the same with most canned oscillators.

 

I just like to watch it for, like you said, divergence. It works really well for that, a warning signal is all. Possibly a confirmation of some other method.

 

Tasuki, you know I am saving all the charts I put up in a file and its incredible how similar some of these are. Some of them even take place at the same time of day. I think not too many talk about this.. or maybe just can't see it/program it.

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Daily chart has potential to go both ways.. at a pivotal point today - - especially by forming a doji on the daily chart. The Andrew's lines are so nice.. Trix has broken out. That means the momentum of the previous down trend is either slowed down or stopped.

You know everyone is watching the 61% fib number of this pullback, looks like that is at 752.5 area.

Volume was above average but unimpressive on the first push higher, there should be volume if this is going to be a successful move.

 

Good volume on a gap higher tomorrow morning looks like a good long entry...

MyScreenHunter.jpg.94cf0270d270519db2feaa6db17c32db.jpg

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Dang, Waveslider, I prepared a reply to your chart from permalink 90 and you're already three posts ahead of me. Anyway, my rendition of your post on page 9 of the thread, permalink 90, is instructive, at least for Wolfe newbies. Take a look.

 

p.s. thanks for the TRIX info.

1111111.thumb.png.6f9d6fdd454d2f0255cc3829d1c91aea.png

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Just got into reading the market and had to post. I bought NQ ER2 and ES yesterday on the close based on that. Selling today on close.

I like your rendition. Especially the part about old wolfie! It's fun when you can think like a contrarian (and be right).

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This one had a deep #5. It would have stopped you out if you took the aggressive entry. If you waited for the 2-4 line it was fine. Notice where it closed, at target.

My number 1 point is at the 50% mark, as usual.

MyScreenHunter.thumb.jpg.f3b47a0f3c9daaab52f2d1c918133d9d.jpg

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