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Wolfe Waves - Get in the Zone

  • #1,281
  • May 12, 2017 9:19am May 12, 2017 9:19am
EURUSD 6H Renko [25 pip] Chart CWW:
The orange text maps out the correction.
The CWW has that over balanced look at D[5].
[I remember that being important from my previous WW days]
Cheers, U2
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD 170512 6H [1] WW.png Size: 94 KB
Wait, or you will be slaughtered!
  • #1,282
  • May 12, 2017 12:23pm May 12, 2017 12:23pm
Quoting Uturn2
{quote} Hi Juri, Would you advise how to get more previous data on my Renko charts. Thanks, U2
I'm not sure this is what your asking but you can get more history on your meta4 by going to:

TOOLS >>> OPTIONS >>> CHARTS >>>> "MAX BARS IN HISTORY/CHART" at the bottom

Beware though it may slow down the platform
Pride always comes before destruction.... -Proverbs 16:18
  • #1,283
  • May 12, 2017 12:26pm May 12, 2017 12:26pm
hy expo33 can you please send me your template
  • #1,284
  • Edited May 13, 2017 11:04am May 12, 2017 12:44pm | Edited May 13, 2017 11:04am
Quoting Expo33
I'm wondering if anyone else's computer is getting lag when having multiple charts up with the WW indicator on it because my computer is lagging really bad. Really frustrating considering it's only about 18 months old. Anyways, I am using the indicator to scan pairs then manually drawing the wave so I can track multiple pairs without having the computer freeze up. Anatomy of a trade before an important news event. This morning's US CPI and retail sales prints could potentially move the market 30-50 pips. Maybe it won't but that's not the point....
A follow up to our "ANATOMY OF A TRADE"

Indeed, my hope for a dissapointing US data print this morning came true and as a result price dropped right into my fill zone. Three of five positions were filled.

Here's the updated look:

USD/JPY 30MIN CWW
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Stripping away the trade levels etc to see the simple concept behind the fill level zone. We can see the initial price drop, then the attempt to bounce, then the second little price wave down to the confluence level.

This trade may still be a loser in the end but as a trader I've done my homework and my job by being prepared in advance. In the context of Wolfe wave theory, I have used my personal filtering system to preset a high probability zone of potential reversal. The local demand zone (orange circle) is quite obvious. The fact that it perfectly matches up with the 141 BC extension FIB, the .50FIB of the larger move, and a Gann fan level, well, that may be a coincidence, but I don't believe that for a second. To me a price chart is like a living organism that's inner workings are controlled by human behavior, and I believe that behavior can be modeled by the mathematics of geometry, time and space.

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Pride always comes before destruction.... -Proverbs 16:18
  • #1,285
  • May 12, 2017 1:24pm May 12, 2017 1:24pm
Quoting Ace090
hy expo33 can you please send me your template
Hi Ace.

I had to remove the original template from post #1 because I reached the limit for attachments.

Here is the original template.

NOTE: The Wolfe wave indicator in this template is the 8.5 version. You can change it and use the 9.6 or 9.6.1 version if you want, they are on post #1. Also, I find that with all of the indicators, especially the newest Wolfe wave version, the meta4 can start lagging a bit. So you can modify it as you like
Attached File(s)
File Type: tpl WOLFEWAVE.tpl   179 KB | 815 downloads


Here is what it will look like:
Attached Image (click to enlarge)
Click to Enlarge Name: temp.png Size: 88 KB
Pride always comes before destruction.... -Proverbs 16:18
  • #1,286
  • Edited 4:42am May 14, 2017 4:11am | Edited 4:42am
Hope everyone is enjoying their weekend.

Thought I'd get this week started by going through my pre-trade filtering process. There is no right or wrong way to do this. The process should be personal, but it needs to be done every time you take a trade.

Ok, so you put the WW indicator on a chart and you see a potential WW. In our example, the wave is pretty steep, a little rough around the edges, nothing too special. Just one of dozens and dozens of WWs that are forming during the week. So, why would we choose to trade or not trade this wave? Well, we can't answer that question without going through our personal filtering process.

Below is the potential wave without any filters. Just the naked wave detected by the indicator.

NZD/CAD 1H POTENTIAL CWW - NAKED
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THE FILTERING PROCESS

I always check 4 things no matter what when I detect a potential wave. Again, each trader has their own set of tools. I have many, but these 4 are checked before EVERY trade.

1) Previous S/R
2) The BC extension FIB
3) The FIB retracement levels from the larger, most recent move
4) The Gann Fan

In our example, I've taken all of the structure trend lines off the chart along with the zig zag just so that it's easier to see the filters and comments. I started naked with only the two blue triangles that outline the potential wave. Then I added the filters

Here is the final chart with analysis below:

NZD/CAD 1H POTENTIAL CWW - WITH FILTERS
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1) Notice the previous S/R. What sticks out most to me is the fact that price seems to accelerate when it's passing through resistance levels 1 and 2. So it stands to reason IF price breaks through resistance level 1, then it may accelerate towards level 2. Notice each time price moved through this zone, there are pretty large candles. This is a good thing. We want price to reach point D. Even better if it's accelerating. Remember the physics theory that Bill Wolfe quoted: "for every action there is an equal and opposite reaction". And that's what we want. We want that elastic band to stretch to the limit (point D) before running out of momentum, then all of that stored up energy can be released in the opposite direction, the direction of our trade.

2) Point D is exactly the 261.8FIB extension of BC

3) Point D is exactly the 61.8FIB retracement level of the biggest and most recent move

4) The 2x1 Gann fan line exactly intersects at point D. Remember Gann fans bring in the element of time. The only way point D can intersect that Gann line perfectly is if the CD leg of the wave has the same number of candles as the AB leg (again time is of the essence here) Remember the indicator draws the waves assuming it will have perfect candle symmetry between AB and CD. It looks like about 14 candles for the AB leg so price would have to reach point D in about 14 hours from market open to be exactly in that D circle. (That would be pretty amazing if you ask me). Still, a few hours less or more and it would be fairly close.

NOTE: Resistance level 2 is basically in line with our 2 confluent FIB levels.

Sorry if this seems like an endless rant, but I feel it's absolutely vital to trading these waves successfully. I hope traders will take the time to look at the chart and compare it to what I'm saying. Look at the first chart. Looks like random price action. Put WW theory and a filtering system in place and you get chart 2. Now price doesn't look quite that random.

Also note, I will be scaling in a bit early as I like to do. Probably 5 positions 2-3 pips apart. With seemingly so much resistance heading into point D, I like to make sure I get at least a few small positions filled.

Having gone through all of this analysis, the market could open up tomorrow and price could just drift lower and completely invalidate this wave before it actually comes to fruition. Or, price could make it to D and then an OPEC member could unexpectedly make a statement that they are increasing supply, thus oil price plummets, thus sending NZD/CAD price 100 pips higher blowing up our trade. Both scenarios are irrelevant to our plan. We can't predict if price will go lower tomorrow and we can't predict what an OPEC member will unexpectedly say. What we can do, is locate a high probability zone where price may reverse based on Wolfe wave theory coupled with a well thought out filtering system.

I hope this post will open trader's eyes to the possibilities. You are only limited by your imagination and your willingness to do the hard work. Be meticulous, be patient, and be confident that your trading endeavors will become reality.

Remember, CONFLUENCE IS KING!

Safe and prosperous trading going forward friends.

-Kurt
Pride always comes before destruction.... -Proverbs 16:18
  • #1,287
  • May 14, 2017 6:12am May 14, 2017 6:12am
thanks, very good post

One question tough, how do you personally draw the fan angles?
Do you use High/lows of a move or do you look for the angles to fit previous price bounces, or just 45 degree?
In the last case, do you square time and price before (by adjusting the scale)?
the 3rd wave is the crowd's wave
  • #1,288
  • May 14, 2017 8:27am May 14, 2017 8:27am
@ Expo
You may, in time, want to think about putting a reference or link (is that possible?) to your excellent post 1286 on the front page of the thread. IMHO, a strategy for filtering out high probability trades is exactly what the doctor ordered for the Wolfe Wave strategy given that so many trading opportunities set up. The key is to look for highly visible support and resistance levels and you have the nearest ones covered with your resistance zones. The confluence effect cannot be stressed enough and you have done a fabulous job of giving Wolfe Wave traders some boxes to tick so that they may have confidence in taking any particular trade. Good job, sir! After all, institutions move the markets and the likelihood of them trading Wolfe Waves is remote at best. Therefore, in order to get your strategy trade moving, there has to be really good reasons why other participants would enter the market and propel it to your profit targets. Confluence obviously gives more reasons why others would enter the market.

I have been developing my own price action strategy for some time now and have dissected trade set ups into their various components based on things that I want to watch out for. For instance if I'm looking at the various characteristics of a pullback in a trend, some things I may look for would be 50% pullback (0 or 1) or a pullback to the 20ema (o or 1). Using an Excel spreadsheet for this analysis is extremely powerful as, by the time one has looked at 200 trades or so with many criteria for each trade based on prior price action and the pullback sequence as well as entry, exit, win, lose, R-multiple profit (and loss - which should not exceed 1!), there is a good bit of data that can be queried in whatever way you like. The results can be very surprising and give the trader a few really key features to look for in order to find trades that have as much as 60-75% probability. I would suggest, if other traders can be bothered, that a similar type of analysis is carried out for Wolfe Waves. Criteria such as those in Expo's filtering system would be a good start to the column headings / criteria, but there could be many others too - again your imagination is the only thing limiting the process. This type of exercise also ensures the trader records all of his/her trades and gives the trader a great deal of exposure to different looking set ups. It is easy to do manual backtesting on this type of strategy too, albeit time-consuming. It is a marathon, not a sprint....

From a Price action perspective I really like the USDJPY setup that was posted (Expo I think) last week; for example, there is a bull channel on the H4 / H8 and price has pulled back to the trend line and also had a >50% PB from the high of the move. There are other reasons too, but for me there is great confluence there.

Wishing you all a very profitable week ahead.
Stuart
  • #1,289
  • May 14, 2017 11:12am May 14, 2017 11:12am
Quoting juriFX
thanks, very good post One question tough, how do you personally draw the fan angles? Do you use High/lows of a move or do you look for the angles to fit previous price bounces, or just 45 degree? In the last case, do you square time and price before (by adjusting the scale)?
Thanks Juri.

Yes, I draw the 45 degree line from the beginning of an impulse wave that I deem has relevance to area of interest.I think drawing the Gann fan is subjective to some extent. In the NZD/CAD example it's pretty obvious where it should be drawn. In many cases, however, the last impulse wave isn't so distinct. Many times I draw multiple fans just to see if any patterns emerge. I also like to check the higher time frames.

I'm still a novice when it comes to Gann fans but from what I've researched, it's hard to truly square time and price on the Meta 4 platform. I use the Fibonacci fan tool and add all of the levels manually with the corresponding converted angles. The fan doesn't stayed squared when changing time frames or when you're zooming in and out but it will remain squared when you go back to the original time frame and when you zoom back to where you originally drew the fan.

These are the converted angles with corresponding levels that I manually set in the Fibonacci fan tool
Attached Image
Pride always comes before destruction.... -Proverbs 16:18
  • #1,290
  • May 14, 2017 11:27am May 14, 2017 11:27am
Quoting salamanda74
@ Expo You may, in time, want to think about putting a reference or link (is that possible?) to your excellent post 1286 on the front page of the thread. IMHO, a strategy for filtering out high probability trades is exactly what the doctor ordered for the Wolfe Wave strategy given that so many trading opportunities set up. The key is to look for highly visible support and resistance levels and you have the nearest ones covered with your resistance zones. The confluence effect cannot be stressed enough and you have done a fabulous job of giving Wolfe...
Thanks Stuart.

Very nice post my friend. I'm going to add the post to the first page along with some others that have some extra significance. I've been pressed for time since the beginning of this thread. I promised myself that I would scale back my commitments heading into next year.

The spreadsheet seems like a super productive exercise and very time consuming! There's no room for laziness in forex as you know.

Cheers, -Kurt
Pride always comes before destruction.... -Proverbs 16:18
  • #1,291
  • Edited 12:44pm May 14, 2017 12:31pm | Edited 12:44pm
I stumbled upon this WW on the EUR/NZD weekly.

Let's break it down. Two things I notice on the weekly chart:

1) Point D near previous S/R
2) A doji followed by a hanging man (pretty bearish in my opinion considering the time frame)

EUR/NZD WEEKLY CWW
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Here's the daily chart with a look at some Gann fans. Possible price containment to the upside. Imo, not totally conclusive. This is a volatile pair so 100 pips either way on the bigger time frames is very possible.
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Here's a look at the FIB analysis on the daily chart. Imo, very powerful. Three FIB levels coincide closely with point D. All within 15 pips of each other on a daily time frame for this pair? That's something that should raise one's eyebrows.

1) 61.8FIB retracement from most recent and pertinent big move. (red)
2) 241FIB extension of BC (yellow)
3) 200FIB extension of XA (green)
Attached Image (click to enlarge)
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And the icing on the cake is a retest of the completion point of a bearish Quasimodo pattern (up and under pattern). Here's a look at that on the 4H time frame
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Longer term fundamental perspective: I think NZs economic issues are way less complex than the Euro economy and should be easier to manage. I also believe that Mr. Wheeler of the RBNZ has been forthright in his rhetoric. He's basically done exactly what he said he would do. And of course, the carry trade for larger entities would likely remain attractive going forward into 2018.

Imho, small positions with a fairly large SL could yield some big pips over the next couple of months
Pride always comes before destruction.... -Proverbs 16:18
  • #1,292
  • May 14, 2017 2:18pm May 14, 2017 2:18pm
Quoting Expo33
{quote} Thanks Stuart. Very nice post my friend. I'm going to add the post to the first page along with some others that have some extra significance. I've been pressed for time since the beginning of this thread. I promised myself that I would scale back my commitments heading into next year. The spreadsheet seems like a super productive exercise and very time consuming! There's no room for laziness in forex as you know. Cheers, -Kurt
Hi Kurt,
Actually, I generally trade the FTSE (UKX) 5min chart so my strategy evolution and analysis is based on a couple of years of those charts plus another timeframe. The aim is to get it going well on that and then move on to the infinitely more liquid EURUSD as and when I have looked into the idiosyncracies of that instrument on the 5min timeframe. Currently getting all of the relevant charts saved when I can. Every instrument has its own behavior in terms of what works well as technical S / R, how deep the pullbacks are - including how much a genuinely sensible stop might be taken out by before the move continues etc etc. However, your post regarding the USDJPY Wolfe Wave spurred me to take a look at the setup and has got me doing a reasonable amount of work over the weekend on higher timeframe Fx charts to see if I can add them to my strategy trade plan. TBH I would have liked to have seen the pullback go a little deeper (at least to 11313 which would be a double bottom on the H8 according to ProRealTime charts) as I can't see any robust technical support that has kicked in yet on the H8 apart from (with rose-tinted spectacles) maybe an inferred breakout test of a lower timeframe swing high pivot (11330) based on an upper tail . I can see it on lower timeframe charts, but I generally like to at least be able to strongly infer it on the timeframe that I am trading (tails on bars etc). I'm thinking that we will maybe get another small leg down, but a swing stop should contain it if the bull trend on this timeframe is to continue.

The spreadsheet is time-consuming, but it is as ongoing dynamic piece of work so it doesn't have to feel like an arduous task. Even starting one now, after a bit of thought as to what one wants to look for, and updating it with real-time trades rather than 'boring' backtesting may soon give enough data to become statistically significant for Wolfe Wavers. The power of this approach should not be underestimated!

Also FWIW, I see your 'bearish Quasimodo pattern' - sorry, never heard of it! - as an expanding triangle or I believe some people call it a megaphone (?) where there is a concurrent bull trend (Higher highs) and bear trend (lower lows) and therefore a trading range. I would generally expect the prior HH to be taken out given the strength of the bull spike at the start of the 4th leg, but the market is full of surprises and I may very well be wrong.

Green pips to all.
Stuart
  • #1,293
  • May 14, 2017 2:39pm May 14, 2017 2:39pm
Quasimodo pattern = Up and under price pattern https://www.forexfactory.com/showthread.php?t=444458

https://paracurve.com/2009/06/over-a...r-pattern.html
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  • #1,294
  • May 14, 2017 2:57pm May 14, 2017 2:57pm
Quoting salamanda74
{quote} Hi Kurt, Actually, I generally trade the FTSE (UKX) 5min chart so my strategy evolution and analysis is based on a couple of years of those charts plus another timeframe. The aim is to get it going well on that and then move on to the infinitely more liquid EURUSD as and when I have looked into the idiosyncracies of that instrument on the 5min timeframe. Currently getting all of the relevant charts saved when I can. Every instrument has its own behavior in terms of what works well as technical S / R, how deep the pullbacks are - including...
Ironic that you mentioned you'd like to see UJ at least at 113.13. About an hour ago I pulled up UJ on www.xe.com and it was showing a gap down to 113.13. It has since moved up a bit but technically you got your 113.13!
Pride always comes before destruction.... -Proverbs 16:18
  • #1,295
  • Edited 5:43pm May 14, 2017 5:01pm | Edited 5:43pm
Quoting Expo33
{quote} Thanks Juri. Yes, I draw the 45 degree line from the beginning of an impulse wave that I deem has relevance to area of interest.I think drawing the Gann fan is subjective to some extent. In the NZD/CAD example it's pretty obvious where it should be drawn. In many cases, however, the last impulse wave isn't so distinct. Many times I draw multiple fans just to see if any patterns emerge. I also like to check the higher time frames. I'm still a novice when it comes to Gann fans but from what I've researched, it's hard to truly square time and...
Hi Kurt:
I am not sure what exactly you mean by square chart, if you mean that the X (Time) to Y (price) Ratio be one to one ..?
then it can be done easly on changing it ratio to 1:1 in property of the chart context menu....? or this is not what you mean...?
And as you know, usually while the time is linearly changing, price scale is exponential, and being so it is very difficult to estimate the necessary 45 degree angle for the fist Gann line.
  • #1,296
  • Edited 8:46pm May 14, 2017 6:02pm | Edited 8:46pm
Quoting parviz1953
{quote} Hi Kurt: I am not sure what exactly you mean by square chart, if you mean that the X (Time) to Y (price) Ratio be one to one ..? then it can be done easly on changing it ratio to 1:1 in property of the chart context menu....? or this is not what you mean...? And as you know, usually while the time is linearly changing, price scale is exponential, and being so it is very difficult to estimate the necessary 45 degree angle for the fist Gann line.
What I mean is that when you change time frames or zoom in/out the 45 degree line will stay at 45 degrees but the 1x1 fan line won't stay on that 45 degree line

With the Meta 4 platform, the reality is that you can't truly square your Gann fan using the Fib fan tool. At least that's what it seems from reading all of the information I could find on the subject. At the very least, I just want the fan to come back to the same original position after changing time frames and zooming in/out so I don't have to redraw the 45 degree line and the Fib fan all over again.

There's a good discussion here by "Mastermind" whose knowledge on the subject dwarfs anything I could ever know. Post #8 is where the discussion starts.

https://www.forexfactory.com/showthread.php?t=652723
Pride always comes before destruction.... -Proverbs 16:18
  • #1,297
  • Edited 11:53pm May 14, 2017 11:42pm | Edited 11:53pm
Quoting Expo33
I rarely trade AUD/NZD as price tends to be too choppy but I like this set up. Fundamentally, I think the 200 pip Aussie gain here is a bit overcooked. All because of the RBNZ keeping the rate the same in addition to some dovish rhetoric. I'm short at 1.08 off the retest of the 200FIB extension of BC which also matches up to the pip with the 61.8FIB from the larger wave down. Throw in a Gann level and the 1.08 round number and I can't resist Some would say a bull flag but perhaps it's a bull trap AUD/NZD 1H CWW {image}
Held over the weekend and now we have a nice free roll situation. In the green 30-40 pips now to see where London takes this. All SLs moved to BE.

Don't want to toot my own horn (actually I did play the trumpet in middle school), but just want to show how effective WW theory can be. We aren't trying to make any bold predictions about lasting trend reversals. All we are doing is capitalizing on a market structure that is out of balance with the physics and geometry of price. That may sound ridiculous to many professional traders but to each his own. All we are looking for is a 20-40 pip bounce. Then we can micro manage the trade and reassess the situation technically and fundamentally.

AUD/NZD 1H CWW
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Pride always comes before destruction.... -Proverbs 16:18
  • #1,298
  • Edited 2:12am May 15, 2017 1:13am | Edited 2:12am
Quoting Expo33
Hope everyone is enjoying their weekend. Thought I'd get this week started by going through my pre-trade filtering process. There is no right or wrong way to do this. The process should be personal, but it needs to be done every time you take a trade. Ok, so you put the WW indicator on a chart and you see a potential WW. In our example, the wave is pretty steep, a little rough around the edges, nothing too special. Just one of dozens and dozens of WWs that are forming during the week. So, why would we choose to trade or not trade this wave? Well,...
As I stated in this post, we can't predict what some large oil producers like Russia/OPEC members might say. Oil spikes about 70 cents on this news giving life to CAD across the board. The structure for my NZD/CAD set up is still valid but may break down. I generally stay away from CAD pairs just for this reason.

https://www.forexfactory.com/news.php?do=news&id=664597

No harm no foul, we haven't lost anything, only the time it took to analyze the set up and set the orders

EDIT: Structure is now invalid so the trade set up is thrown into the scrap heap
Pride always comes before destruction.... -Proverbs 16:18
  • #1,299
  • May 15, 2017 1:54am May 15, 2017 1:54am
Quoting Expo33
I stumbled upon this WW on the EUR/NZD weekly. Let's break it down. Two things I notice on the weekly chart: 1) Point D near previous S/R 2) A doji followed by a hanging man (pretty bearish in my opinion considering the time frame) EUR/NZD WEEKLY CWW {image} Here's the daily chart with a look at some Gann fans. Possible price containment to the upside. Imo, not totally conclusive. This is a volatile pair so 100 pips either way on the bigger time frames is very possible. {image} Here's a look at the FIB analysis on the daily chart. Imo, very powerful....
Entered short 159.36 at market open when liquidity picked up enough to make the spread reasonable. Added more at 159.02. Off to a nice running start about 80 pips green so far. SLs all moved to the 159.36 level for now
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Pride always comes before destruction.... -Proverbs 16:18
  • #1,300
  • May 15, 2017 2:04am May 15, 2017 2:04am
Quoting Expo33
Hope everyone is enjoying their weekend. Thought I'd get this week started by going through my pre-trade filtering process. There is no right or wrong way to do this. The process should be personal, but it needs to be done every time you take a trade. Ok, so you put the WW indicator on a chart and you see a potential WW. In our example, the wave is pretty steep, a little rough around the edges, nothing too special. Just one of dozens and dozens of WWs that are forming during the week. So, why would we choose to trade or not trade this wave? Well,...
Hi Kurt, Thank you so much for this useful information. God bless you mate, Cheers
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