Modify Wolfe wave - page 2
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i recently got the WW manual and wow my trading improved even more.
here is nzd usd
i got a hold of the wolfe manual. wow. it is worth every penny!
Mind to share the manual? I was following it since there's a thread about wolfe waves at moneytec, but there was many different rules, it's confusing me. Hope the manual will make it clear.
From the moneytec forums, here are the trading rules. They are taken from Street Smarts, and a few comments from people who took the course. Many people trade profitably using wave patterns that aren't true Wolfe Waves, but true Wolfe Waves apparently have a higher accuracy rate.
I'm still reading about WolfeWaves on moneytec.
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1. Number 2 wave is a top.
2. Number 3 wave is the bottom of a first decline.
3. Number 1 wave is the bottom prior to wave 2 (top). Point 3 must be lower
than point 1.
4. Number 4 wave is the top of wave 3. The wave 4 point should be higher than the wave 1 bottom.
5. A trend line is drawn from point 1 to point 3. The extension of this line
projects to the anticipated reversal point which we will call wave 5. this is
the entry point for a ride to the epa line (1 to 4).
6. The Estimated Price at Arrival (EPA) is the trend line drawn from points 1 to
4. This projects the anticipated price objective. Our initial stop is placed just
beneath the newly formed reversal at point 5. It can then be quickly
moved to breakeven.
IMPORTANT POINT: You cannot begin looking for the Wolfe Wave until points
1, 2, 3, and 4 have been formed. Keep in mind that point 3 must be lower than point 1 for a buy setup. It must be higher than point 1 for a sell setup. Also, on the best waves point 4 will be higher than point 1 for a buy setup and lower than 1 for a sell setup. This ensures that absolute runaway market conditions do not exist.
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take a line that is parallel to the 2-4 line ( the same angle as the line connecting the point 2 and point 4 ) and draw a line from the point 3 at this same angle.
As the angle is steeper than the 1-3 line it gives you a deeper level for the point 5 entry.
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!Reversal
I don't want to bust your bubble on this thread, but the majority of examples being provided here are wrong. For example, the 2 point is the high or low of the pattern and it needs to be a distinct one in relation to the market also, not just any high or low.
Also the reference page by this other trader who tries to provide the rules as he understands it is wrong. I would suggest going back to www.wolfewave.com and looking at Bill's examples.
In case you are wondering, yes I took the course several years ago and know exactly how it is done. However, all of us who took the course also signed a non-disclosure agreement and so there is very little we can tell you about the pattern that is not available to you off of Bill's site. There is a limitation in the use of this pattern with regards the Forex, so if this is all you trade then you will find it doesn't work as well as it does with stocks and some other markets. It still works, just has a limitation.
It helps to remeber that this is technically a wedge pattern and shows up during consolidations. If you have a trending market then the patterns will be few and far between, as well as having greater risk when they do show up. If a market is not trending then you are likely to have several patterns develop with some smaller ones inside of larger ones.
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!Reversal
The WW is a wedge pattern with the 2 and 5 points at the extreme. It is found during consolidation periods. If you are trying to pick one during a trend then you will usually get burned. The 2 point is the first one that is identified and it is the high or low of the pattern.
Look for an ABC pattern to form between the 3 and 4 points which implies a balance between these two points. They are the pivot of this pattern and there should be some indication that the market is having some indecision here. From this the 1 point is the extreme that is balanced by the 5 point, using this pivot as its center. Usually you will see a slight overshot when it reaches for the 5 point. The traded move is actually a balance reaction between the 1 and the target point, again working off the same pivot point as the prior 2 to 5 move.
The first thing I look for is a break of a trendline after a trend has been in progress for some time. This is when you should start to expect them to show up and they can do so multiple times. Once a trend starts you can forget looking for them. Doing so is dangerous and costly. Let me emphasize this point; WW are consolidation patterns and not found in trends. If you are picking points that could be considered a trend you will run into a lot of trouble. Avoid these whenever you can. Even if they work out they are often accompanied by high risk entries. There are times when you can trade those that form during a trend but this is an advanced trade. If you haven't taken the course you shouldn't try it. There will be plenty of well qualified trades without worrying about these high risk versions.
Here is an example of an actual WW in progress on a daily chart. I am expecting a reaction off of the red line that is currently being hit, but this should be short lived and the target line should still be hit. Note that the target line is off the second point (Marked 4b) rather than the first point.
I was quoting the useful parts out of over 400 posts that I read through. I don't know enough about WolfeWaves to determine if your charts are incorrect. One of the things I noticed in many pictures on moneytec was several sets of parallel lines. I don't know how critical that is. I'm looking forward to more information as well.
I was quoting the useful parts out of over 400 posts that I read through. I don't know enough about WolfeWaves to determine if your charts are incorrect. One of the things I noticed in many pictures on moneytec was several sets of parallel lines. I don't know how critical that is. I'm looking forward to more information as well.
Hi to all
Simply explore the site of the WolfeWaves method ( Bill Wolfe ) :
http://wolfewave.com/a_letter_to_prospective_clients_.htm
and you'll see the STREET SMARTS book is not giving all the truth....
"....
P. S. Due to the popularity of the book Street Smarts, in which the basic architecture of the Wolfe Wave was first revealed, many traders feel that they have a complete understanding of it. Street Smarts was printed many years ago and since that time I have made significant improvements. Examples that I have seen on the internet of supposedly Wolfe Waves, bare no resemblance to what I currently teach. I cannot over emphasize this point....."
Bye
DV
Is my numbering correct..............
Clam, could you or anyone knowledgable and trading the Wolfe_Wave method, please look at my 2 attached 60M_charts and tell me whether the numbering is correct.
IF the numbering is correct then we can look towards 1.9300 for the GBP/USD.
Secondly, I wish to draw your attention to the RSI-14 studies (marked in RED on the RSI_window). 26 October @ 18h00 candle, the RSI hit 84% level which is near the maximum "allowable" high of 90. It then makes an about turn and tests the 40% level a couple of times, trying to force the market into a Bear market, but the price keeps on rallying. It finally breaks through on the 3rd of November only to break back again on the 6th of November. It once again tests the 40% level on the 8th and gets rejected and breaks on the 9th for a very short period of time, clear indication that the market is still Bullish. (Other indicators would have confirmed that, especially the Murrey_Math levels)
The price and therefore the RSI has now broken the 65%_level which represents the Highest level in a BEARISH -market and it will be intresting to see if the RSI is heading for the 80%-level again and therefore the 1.9300 level.
Your comments are awaited with great anticipation.
Best wishes.
What do you think about this one?
Does it fit? But if, how to count it?
The target could be pretty high in this example.
I haven't read the entire moneytec forum, but the diagrams in this picture match all of the trading rules I have found. point 5 was not predicted in any of the 3 "potentials" listed here, and the target was never hit.
Looking at the trading rules, all three different colors match every rule documented. I think I need the manual to give this credibility.
The "potential WW" was spotted at H1 timeframe, I came in closer to make this chart.
i think i forgot to post this. excellent trade. mad pips!
According to what I have read, position 4 is mislabeled. Should it be the next peak after 3? If it was adjusted, then eyeballing it says you would still have hit the desired profit point, but more accurately. I can't really tell since I haven't seen a 1-3-5 lineup yet or the profit target hit on my own.
...probably a wolfe wave. If it creates the exprected point 5 I will go long