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

[calven]

Beautiful!!!!! 

(before and after charts)

[ScottishTrader]

Calven,
I just posted a couple WWs in the strategic orientation section - also saw the WW n the COMPX - saw another one in the longer term chart, but having read your thread, am now not sure it holds up to the symmetry rule - what do you think?  Possible longer term target?  If so, things are about to get real bearish!!!

[calven]

Yes saffey that would violate the symmetry rule...

Here is an update of the COMPX... looks like its retesting the resistane line.

[agatto2]

So have you noticed a time frame where the symetery is violated? For ex scottish traders w is bettween points 1 and 3 is 7 months, then  bettween 3 and 5 is 4 months this you say violates symetry, but on your ealier post for wal-mart -- i noticed that there is not symetery bettween points 1 3 5 , but points  1 and 2 and 3 and 4 and 5 are closer in time intervals. I think im trying to look for what will violate the pattern , and thanks for an awsome post. tonyg

[calven]

Many things are wrong with the above chart scottishtrader made when talking about WWs. This is not a personal attack. I just want to point it out the problems in the chart so everyone understands. I am repeatedly asked "does stock XYZ fit the WW pattern...?"  Folks -  if it doesnt look EXACTLY like the diagram I posted then it isnt a Wolfwave.

Here are a few things wrong with the chart:
Point 4 on Scottish Trader's chart is significantly above point 2... Yet point 3 is NOT equally above point 1....another thing I see wrong is that his chart does not have a significantly upsloping channel. Remember the WW is based on "imbalance". You are looking for an oversold or over bought position at point 5 with your target (balance point) being point 6 or connecting 1-4.  Therefore you need a "fairly" steep upward move or steep downward move.

Yes, the channel trendlines can converge slightly...as long as they are equally converging on both the top and bottom. Again with Scottishtrader's example the top line was NOT as steep as the bottom support  line...

The correct bear WW is shown below. The pattern must look EXACTLY like the one shown below...if it doesn't than you are not looking at a tradeable Wolfwave pattern.

[ScottishTrader]

Calven,

Thanks for the explanation, no worries, I don't take it as any kind of personal attack whatsoever.  Just trying to look for wolfewaves, and as you said, figure out what is a valid one and what is not.  This certainly helps!!  And I'm also glad that the longer term chart is not a WW, thought I do still think the COMPX may be due for a pullback over the next few months - still looks overbought.

Please, if you see any others, or particularly tradeable (approaching point 5) examples, please let us know - would like to put it to the trading test, or at least follow one as it is developing.  I may also start looking for them on shorter term charts too - may make some good chort term swing setups.

[calven]

I will most certainly post any WW's I see. The problem with the pattern is that it is very good at hiding... I have found just 2 in the past month...

I hope others post their WW's in this thread also.

thanks

[Melf Elf]

calven,

Thanks for all your nice work on the Wolf Waves.  Applause.

In the QQQQ, there isn't much slope to the waves, as there is to your NASDAQ Comp, but there's nice symmetry in both time and price.  There is only one day difference between Waves 1&3 vs. Waves 2&4; and, there only is one penny difference between same.

Don't know if the slope is enough to qualify for a WW, though. 

The QQQQ printed a new high today and still is chasing the trendline target at #6.

[metro]

Here are some statistics of the rising wedge.



Failure rate     24%
Failure rate if waited for downside breakout    6%
Average decline after downside breakout    19%
Most likely decline after downside breakout    15%
Average # that meet price target    63%
Average # that pulled back to retest the breakpoint    53%
Average downside breakout distance to the apex    61%
Premature downside breakouts    22%
Rising wedges should only be shorted once a downside breakout has occurred as this lowers the risk substantially as you can see above.


referenced from the book: Encyclopedia of Chart Patterns by Thomas N. Bulkowski - Publisher: John Wiley & Son  http://tinyurl.com/8ezrz



NOTE: This type is based on it entering the form in a down trend. On this page I see one in an uptrend and ones in a down trend and they look the same but they do not act the same.

The falling wedge is like the WMT chart below and it has slightly different statistics

Failure rate     10%
Failure rate if waited for upside breakout    2%
Average rise after upside breakout    43%
Most likely rise after upside breakout    20 - 30%
Average # that meet price targets    88%
Average # that pulled back to retest the triangle bottom    47%
Average breakout distance to apex    69%
Premature breakouts    27%




These are not the exact same as the wolfwave but similar - Here is I guess a discription like was below and also shows some  gartleys which are fun

Advanced Channeling Patterns: Wolfe Waves and Gartleys

http://tinyurl.com/9xpjw

Here is another article by the same writer not this topic but a method to change settings on an indicator.

Timing Trades With The Commodity Channel Index

http://tinyurl.com/bpo2n

[calven]

Wedges arent the same as WWs, not even close...

WW's are slightly converging in channels unlike the wedge which forms an apex.
WW needs near perfect symmetry and timing...wedges have no target (1-4 line)
Wedges also dont have a point 5 or 6.
They dont have points 1,2,3,4 either...
Wedges are trend reversal indicators; ww's are not.
Wedges contain no measured moves.
Wedges rely on breakouts at the apex..
Wedges rely on balance while WW's rely on imbalance.
WW's work in almost any timeframe!
Most importantly, WW's (when correctly identified) have the highest success rate of any known trading pattern. (90%+)

I could go on and on...

BTW i wrote this article "advanced channeling patterns...etc"  - http://tinyurl.com/9xpjw

Justin published it for me since i wasnt employed with investopedia.

cal

[agatto2]

Kewl cant wait to read. Same old question, school me on this one, Dndn seems to fit the critiria posted below

[calven]

Sorry DNDN does not fit....

The bottom support line you drew doesn't connect the right points. Secondly your bottom support line is MUCH steeper than the top resistance line. This violates the symmetry rule.

Lastly the trendlines you drew make a fairly horizontal channel...the WW needs either an uptrend or downtrend.

-cal 

[fous]

Just came acrossed this thread for the first time just now.... Pretty interesting stuff!

Great job calvin (applauds)

-fousc

[thai626]

Here is a wolfe wave setup:  Points 1, 2, 3 and 4 are already setup.  Point 5 looks like it may be coming very soon.  Look for point 5 to hit in the coming week.  Then this horse is off the races!!  Unfortunately, I currently have it in my portfolio.  I think i'll hold through this hard time.  Good luck everyone!!

[calven]

This looks like a WW. The only thing I question is again the fact that it is horizontal in nature. Ideallly it would be more downsloping. We'll see how this  one developes...