BarroMetrics Views: Wolfe Waves
I have received quite a few requests to follow-up on Wolfe Waves. Here is my take. In the free section of my site, I’ll be uploading the material I found on the net.
Figure 1 shows an ideal Bullish Wolfe Wave. It’s a very common pattern and I found that I applied it will-nilly, I’d lose money. I did find that I turned into a profitable pattern if I used it in the proper context. But before I get into ‘context’ let’s look at the essential characteristics of the BullishWolfe Wave.
- Wave 5 tends be identified by a trend line that usually originates from waves ‘1’ and ‘3’.
- Wave 4 tends be a deep retracement (greater than 61.5 but less than 87.5) of Wave 3.
- Wave 4 holds below the high of Wave 2.
OK, let’s turn to context. Here I need to turn to the Ray Wave. I successful Wolfe Wave tends to form as a continuation pattern in the wave 2 or wave 4 position of a 5-wave structure of in the wave b of 3-wave structure. It serves as a reversal pattern in wave 5 (of a 5-wave structure) or wave 5 (in a 3-wave; here best to see in the first lower timeframe).
That’s a quick summary of my context and essential characteristics. On Tuesday, I’ll look at the Wolfe Wave in the current S&P picture.
FIGURE 1: Ideal Bullish Wolfe Wave