Wolfe Waves Indicator
Perfect trend reversal detector. The Wolfe Waves indicator is a perfect tool for identifying accurate buy and sell signals.
You have probably heard about Elliot, but not so much about the Wolfe wave. Wolfe Waves are enhanced versions of Elliot waves (Eliot waves on steroids if you like). This natural trading pattern helps determine an impending trend reveals and predict future price movement and expected time to reach a specific desired price.
For a price pattern to be identified as a Wolfe Waves, it must meet a series of criteria.
First, the third and the fourth wave must form within the channel created by the first and the second wave.
Secondly, the waves must cycle at a consistent time interval. This means there should be symmetry between the first and the second wave.
Drawing this wave is tedious. In worst cases, you risk drawing the wave erroneously, leading to placing wrong positions and eventually losing. This is where the Wolfe indicator comes in handy. The Wolfe indicator scans the price chart and identifies the Wolfe pattern.
You can use the short-term and long-term trading indicator on any currency pair from 1 minute to monthly time frames. It is suitable for scalpers and longer-term investors, newbies, and experienced traders alike.
Buy/sell signal
The Wolfe Waves indicator is straightforward to use. But it requires a great deal of patience. Once the fourth wave is created, that is a sign of impending price reversal.
Wait for the indicator to draw the first, second, third, and fourth waves. Now enter the trade in the direction of the fifth wave. For example, if the fourth wave was in an uptrend direction, the fifth wave would be a downtrend. Therefore, you should aim to enter a bearish position. Similarly, if the fourth wave is bearish, you should aim to enter a bullish position.
Set the stop loss below the recent swing low for uptrend and swing high for downtrend. The take profit should be at the trend line of the channel formed by the previous waves.
Trading Example
The chart shows price movement for Great Britain against the Swiss franc on a weekly time frame. The indicator scans the price and displays a Wolfe wave (bluish). Notice how the third and fourth waves form on the channel created by the first and second waves. Once the fourth wave touches the channel trend line, traders should be ready to enter the trade.
In this case, the signal was to enter a buy position, as shown by the green arrow. Notice how the price follows the fifth wave until the price hits the channel line created by previous waves. The price perfectly followed the Wolfe Waves indicator.
In this case, the fourth wave was bearish. Therefore, the fifth wave is bullish. Once the price hits this trend line, you should exit the trade and wait for another pattern.
Final Word
Wolfe Waves provide accurate trade entry signals. However, drawing the indicator is not a walk in the park. The indicator eases the job for you. Wolfe Waves indicator is a simple to use and straightforward indicator. It scans the chart, showing the wave enabling you to catch accurate buy and sell signals. You don’t have to both confirm with other indicators. You can use this indicator as a stand-alone indicator.
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