Wolfe Waves: Let’s Unlock the Prediction Game
Wolfe Waves Every trader wants a simple and reliable way to define the entry and exit points of the share market.
To make the best trading decisions every trader needs to stick with the most effective tools that predict market movements using chart patterns. Chart patterns are the basis of underlying buying and selling pressures and have a proven track record of setting records in the favor of the traders.
To identify price targets that give maximum returns, traders need to rely on the best patterns. And Wolfe wave is one of the patterns that occur naturally and are found in the market. One of the extremely effective and game-changer for traders.
Let’s dive right in and find out more about the Wolfe Wave pattern.
What is Wolfe Wave Pattern?
The Wolfe Wave is a pattern that contains five waves reflecting demand and supply and led these waves to the equilibrium price. This pattern was introduced by S&P500 index trader “Bill Wolfe”.
As per Bill Wolfe, the Wolfe wave patterns are very versatile in terms of the time frame but its scope is somewhat specific. Depend on the channel Wolfe Waves theory appears or can develop over a short or long period. They cover a range of time frames from minutes to weeks or months. And traders can predict the scope with excellent accuracy.
If correctly utilize, a trader can make the most out of Wolfe Waves together with effective results.
How to Identify Wolfe Wave Pattern
In this chart, you can see the wave formation 1-2-3-4-5 that makes up the Wolfe Wave. The downtrend channel results in a bullish reversal of price whereas the Uptrend channel results in a bearish reversal of price.
Configurations of Wolfe Waves
An uptrend channel for a bearish Wolfe Wave,
A downtrend channel for a bullish WolfeWave,
Horizontal channels for consolidating price periods.
Rules for Considering WolfeWaves
- Wave 3 and wave 4 remained in the channel created by waves 1 and 2.
- Wave 1 and Wave 2 are symmetrical with waves 3 and 4.
- Wave 5 goes above the trendline created by wave 1 and wave 3 for a bearish pattern.
- Wave 5 goes below the trendline created by wave 1 and wave 3 for a bullish pattern.
- Regular timings between waves. It means that the time taken to complete one cycle for the waves 1-3-5 is equal.
Wolfe Wave is one of the most reliable patterns to know the correct and timely identification of the market. If you too want to get your hands on the stock market with some good predictions get in touch with Gannandwaves today.