5 point Bullish Wolfe Wave
MACD Divergence
Oversold Conditions
3 Magic Lines
My most recent interest is in the 5 point Bullish Wolfe Wave.
I first saw this here at 3 Stocks on Fire started by Calven but didn't get a chance to look at it in detail right away.
Lately, I've been visiting different internet sites and joined a few forums to clearly understand this strategy.
http://www.wolfewave.com/index.htm
http://www.chart.nu/wolfewave.htm
http://www.wolfcharts.com/default.asp
http://www.elitetrader.com/
http://www.goforex.net/forum/search.php?searchid=9519
http://www.forex-tsd.com/search.php?searchid=631819
To what I've gathered, there seems to be different interpretations of the wolfe wave.
I guess the one that makes the most sense and is followed by the majority of traders (the market) will win.
I would like to follow IVAN for my study and may trade with real money.
Please do your own Due Diligence.
I was going through the symbols that were at the 3SOF stock picking forum and entered them at wolfcharts.com
Wolfcharts.com gave an analysis of a 5 point Bullish Wolfe Wave Pattern.
http://www.3stocksonfire.org/trading/index.php?topic=745.msg99122#msg99122
I decided to draw some lines on stock charts and I came with this interpretation of IVAN.
It looks like IVAN completed a 5 point Bearish Wolfe Wave and Bounced off the target (Wave#6).
Scenario:
Asumming consensus support is 1.73, consensus resistance is 1.97 and the stop is just below the swing low of 1.65.
That would be close to the 10 cent:25 cent reward ratio.
If the 1.65 stop is triggered, where would be the next buy target?
I would probably be looking at around 1.25 (1.27 Fibonacci extention) which is at least 25 cents below the 1.65 swing low to give me a potential risk/reward of 10 cent risk and a reward of at least 25 cents.
Looking forward to how other traders draw their version of the wolfe wave.
What concerns me with IVAN is the big volume that accompanied the top (2.70 high) - A bullish volume capitulation?
If the rallies are accompanied by low volume and:
1) If price doesn't break the 1.98 or the 2.30 swing highs that would create a head and shoulders pattern.
2) If it doesn't break 2.70 that would be a double top
What I've also read from other resources was Bearish Wolfwave target #6 is for shorts to cover and not the ideal entry to go long.
Does that mean we have to look for a new 5 point bullish Wolfe Wave to form first?
It may be better to see the MACD create a higher high cross first.
Another point of view :
The weekly chart looks like it has a cup and handle pattern (not too familiar with this - correct me if I'm wrong).
The daily chart looks like it had fuel (volume) to push through those 3 magic lines and recently bounced off the 200 simple moving average at 1.65.
Scenario: If I were the AX ;D
I would probably trigger the stop at 1.65 and catch them by refreshing my bid of 100 shares using an ECN.
As it rallies back bewtween 1.65 and 1.97, I will show strength by showing size.
Shake out the weak hands past the lower trendline to create the 5 point bullish wolfe wave entry.
Oh if only this was possible... ::)
For now, I guess I'll just have to gather as much info and try to make some money. ;)
Fantastic!