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Definition of 'Wolfe Wave'
In technical analysis, it is a naturally occurring trading pattern present in all financial markets. The pattern is composed of five waves showing supply and demand and a fight towards an equilibrium price. These patterns can develop over short- and long-term time frames such as minutes or weeks and are used to predict where a price is heading and when it will get there.
Source: www.harmonictrader.com
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Investopedia explains 'Wolfe Wave'
If identified correctly, Wolfe waves can be used to accurately predict the scope (equilibrium price) of the underlying security. To identify Wolfe waves, they must have the following characteristics:
Waves 3-4 must stay within the channel created by 1-2
Wave 1-2 equals waves 3-4 (shows symmetry)
Wave 4 is within the channel created by waves 1-2
There is regular time between all waves
Wave 5 exceeds trendline created by waves 1 and 3 and is the entry point
The estimated price is a price along the trendline created by waves 1 and 4 (point 6).
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Search results for 'Wolfe Wave'
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http://www.investopedia.com/articles/trading/05/040405.asp
... Wolfe Waves The Wolfe Wave is a natural pattern found in every market. ... The overriding
factor in identifying the Wolfe Wave pattern is symmetry. ...
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http://www.investopedia.com/articles/trading/06/FailedBreaks.asp
... pattern. The most popular example of this is the Wolfe Wave pattern. (To ...
Here's an example of a Wolfe Wave: Figure 2. Notice that ...
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http://www.investopedia.com/articles/trading/05/AdvFibonacci.asp
... Many traders use this in conjunction with wave-based studies - such as the Elliott
Wave or Wolfe Wave - to forecast the height of each wave and more clearly ...
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