The Wolfwave Pattern / Why walk with bulls - run with the wolves!

[calven]

Wolfwaves
By: Calven

Several common forms of channel patterns exist which can aid in predicting trend reversals and price action. However, few channel patterns exist which give more powerful trading signals than Wolfwaves & Gartleys.

The Wolfwave is a natural pattern found in all of today's markets. Its basic shape represents a struggle for balance between supply and demand in effort to reach equilibrium. This naturally occurring pattern was not invented but discovered as a means to predicting levels of supply and demand. The pattern itself is very versatile in terms of time length. Wolfwaves occur in a wide range of time frames such as minutes or even as long as weeks or months. The pattern is very accurate in predicting future price ceilings and bottoms when identified correctly. When correctly identified Wolfwaves are quite possibly the most effective trading technique in existence today.

The overriding factor in identifying the Wolfwave pattern is symmetry. As show below, the most accurate patterns exist where waves 1-3-5 have equal timing intervals between wave cycles.


Figure 1: Bullish Wolfwave Pattern


Figure 2: Bearish Wolfwave Pattern


Key Ingredients:
• Waves 3-4 must stay within the channel created by 1-2
• 1-2 = 3-4 (Symmetry)
• Wave 4 revisits the established channel of points1-2
• Regular timing intervals
• Waves 3 & 5 are usually 127% or 162% extensions of the previous point

Found In:
• Rising channels in an uptrend
• Falling channels in a downtrend
• Level channels during consolidation periods

Notice that point 5 shown on the diagram above is a move slightly above or below the channel created by waves 1-2 & 3-4. This move is usually a false breakout or breakdown of the original channel and is the best place to enter a stock long or short. The false action at point 5 occurs most of the time in the pattern but isn't absolutely necessary. Point 6 is the target level from point 5 and is the most profitable part of the Wolfwave channel pattern. The target price (Point 6) is found by connecting points 1 and 4.

Here are a few examples of the pattern at work. Remember, Point 5 is an opportunity to take action with a short or long position while Point 6 is the target price.

To reinstate a key point that was touched on earlier. The reason this channeling technique is considered advanced lies in the difficulty of identifying the Wolfwave pattern itself. The hardest part of the pattern is identification. Determining the target price (point 6) is given for you. If the Wolfwave pattern is correctly identified, risk is cut substantially while profit potential is high.

In attempting to learn any trading strategy be sure to paper trade potential Wolfwave setups to gain experience and confidence before putting money behind the setup. Also remember to use stops in order to lessen risk when going live.

Bullish Example


Bearish Example


Questions?
Email me at: [email protected]

[calven]

BF - BASF GROUP



Notice anything attractive about this chart? Seems like BF is moving up. How would you trade this chart? Before scrolling down, see if you can figure out which direction BF is headed...where would you buy?












If you saw a WW in this chart you are exactly right...


Now that you have identified the points, connect points 1 & 4 and you have your buy target.



Action after point 5 validates the WW. Get ready to trade...



Approaching buy target...



BINGO!


Now the retrace back to the previous channel line (sell target)



Perfect hit!



Back to the previous WW line for another entry!


Waiting for another sell target. 73 or the bottom previous channel trendline look good.



(Ongoing post -to be continued)

Why walk with bulls - run with the wolves!

[calven]

WMT also approaching a key WW sell target...

[calven]

COMPX has recently formed a WW.  It has successfully hit its target (1-4)

I will be loading up on gold stocks after Thanksgiving....for a one week hold. Could be a short term sell off in the COMPX to set up for the holiday rally...

[Se7en]

wowww, very nice!!!
<applaud>

[calven]

Update to BF ....

Limit Sell set to: $ 74.50

I think BF will move just past the resistance line as momentum carries it...

[hagAfam]

I went through several ,,head scratching" rituals to comprehend the dynamic inherent in that logic. Very very impressing thought process, indeed!

[calven]

I didn't believe in this pattern the first time I saw it either... I thought it was a typical theory with no proof. Then I began noticing the pattern appearing more and more as I looked at charts. Over the years I began testing the pattern and found it to work quite frequently. As I researched and used trial and error I became better at correctly identifying the pattern. Soon the WW was working nearly every time. Probably the result of identifying the pattern more correcly.

I don't expect everyone here to accept it at first site or by my tutorial. I just ask that you give it a chance and even "paper trade" the pattern. I think you will be suprised.

-cal

[Tirebldr]

Applaud Calven.  Fantastic Tutorial.. Belongs in a book somewhere's so it doesn't get misplaced .

[brandyjoco]

Wow pretty good!  However, I still don't understand...

If the Nasdaq is at point 6 then where does it go from here - down? If so, how far down....?

I am not good at these sort of things and must have read it 10 times by now....

I put alot back into cash because I did not like how the stocks were acting today.

[wrangler]

I applaud you calven for sharing you're trading system. I'll be watching for the wolfwave and use you're post as a guide. We're starting to get some good trading tips on this site that should help us all to become better traders.
Goodluck trading

[akclide]

Hey calven,
             First Thankyou for introducing us to wolfwave.Can you please look at this chart and see if this qualifies .Thanks
Symbol SNDK

[calven]

Sorry that pattern (SNDK) won't work. It doesnt follow the symmetry rule. Although you do understand the concept 1-4 though. Make sure the stock you are looking at looks EXACTLY like the diagram I drew. If it doesnt look like that then it isnt a wolfwave. Always remember, these patterns are rare but extremely tradable when identified correctly.

I clearly misidentified SNDK with my comments above. It was in fact a WW - I apologize for my error in analysis. I have created a chart showing the correct WW trendlines and have made a formal apology to "akclide"...


As for the COMPX...yes it is at point 6. I do think i will head down from point 6. Since point 5 is the "buy" point and point 6 is the "sell" point I assume the pattern accounts for bearishness at point 6....hence the reason for it to be the "objective" target.

As you will read from my first post on the COMPX ww I am calling for a short term sell off from point 6. I believe today's drop is the first drop from point 6....

cal

[wrangler]

Hi calven
Would you call this a wolfwave pattern. I don't have charting membership or software so I'm not able to draw the line and write on them.

[calven]

Nope, Im sorry but I dont see a WW pattern there either...