Wolfe Wave
In technical analysis, it is a naturally occurring trading pattern present in all financial markets. The pattern is composed of five waves showing supply and demand and a fight towards an equilibrium price. These patterns can develop over short- and long-term time frames such as minutes or weeks and are used to predict where a price is heading and when it will get there.
BREAKING DOWN 'WOLFE WAVE'
If identified correctly, Wolfe waves can be used to accurately predict the scope (equilibrium price) of the underlying security. To identify Wolfe waves, they must have the following characteristics:
Waves 3-4 must stay within the channel created by 1-2
Wave 1-2 equals waves 3-4 (shows symmetry)
Wave 4 is within the channel created by waves 1-2
There is regular time between all waves
Wave 5 exceeds trendline created by waves 1 and 3 and is the entry point
The estimated price is a price along the trendline created by waves 1 and 4 (point 6).
Hi Shailesh, hope your well,
In order to proceed and have this really stick,you need to understand a few things about Bollinger bands.
keep in mind Bollinger bands measures
Volatility. Volatility literally means..
-----------------
MOVEMENT or RANGE
-----------------
If price is moving a little bit, Bollinger bands will tighten up and get narrow.
If price is moving a lot, and more accurately in a larger range, Bollinger bands will expand.
One of the things we key in on, is in-between these times.
When Bollinger bands is quiet and narrow, it will almost always be followed by expansion and more movement - which equals potential profits.
Likewise after a strong period of expansion and a lot of movement a quiet time usually follows.
-------------------------------
MORE PREDICTABLE THAN PRICE ITSELF!
-------------------------------
This back and forth of high and low volatility is more predictable then price action itself and this is where the power of Bollinger bands lies.
Once you understand how to interpret this Bollinger band action you can combine it with the other elements I've introduced you to and build amazing trades.
Trades that go on to make huge profits.
Where this really gets AWESOME is when you learn how to combine
these in 3D using more than 1 time frame.
This particular image is a 1 hr. chart a prefect longer term
outlook on a Forex pair.
The estimated price is a price along the trendline created by waves 1 and 4 (point 6).
Hi Shailesh, hope your well,
In order to proceed and have this really stick,you need to understand a few things about Bollinger bands.
keep in mind Bollinger bands measures
Volatility. Volatility literally means..
-----------------
MOVEMENT or RANGE
-----------------
If price is moving a little bit, Bollinger bands will tighten up and get narrow.
If price is moving a lot, and more accurately in a larger range, Bollinger bands will expand.
One of the things we key in on, is in-between these times.
When Bollinger bands is quiet and narrow, it will almost always be followed by expansion and more movement - which equals potential profits.
Likewise after a strong period of expansion and a lot of movement a quiet time usually follows.
-------------------------------
MORE PREDICTABLE THAN PRICE ITSELF!
-------------------------------
This back and forth of high and low volatility is more predictable then price action itself and this is where the power of Bollinger bands lies.
Once you understand how to interpret this Bollinger band action you can combine it with the other elements I've introduced you to and build amazing trades.
Trades that go on to make huge profits.
Where this really gets AWESOME is when you learn how to combine
these in 3D using more than 1 time frame.
This particular image is a 1 hr. chart a prefect longer term
outlook on a Forex pair.
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