Support, Resistance & Chart patterns

[slipshod]

Wide, I call it a wave simply because its a clear rising wedge with false upward breaks. Honestly I care little about it having a distinct 5 point pattern.

Bill Wolfe didn't discover something magical with his "waves". All he did was expand on the workings of rising and falling wedges, which were already known as reversal patterns long before he came along. In the introduction of his book he says as much ... "One chart pattern that I found to be particularly reliable was rising wedge. I found that pattern so intriguing that I literally took it apart to see what made it tick." He put his name to a variation of the pattern, sold a book based on it and charged big money to train people to trade it - good luck to him I guess!

A while ago I exchanged some emails with Thomas Bulkowski, author of the amazing & comprehensive Encyclopedia of Chart Patterns (http://www.thepatternsite.com/mybooks.html#BookEOCP2e), and in his words: "The Wolfe Wave reminds me of what Morris did with candlesticks. He added a confirming candle to an existing pattern and viola! He claimed a new candle. Is it really new?"

So you've got to ask yourself what's more important, Wolfe's 5 point derivation, or the original pattern (rising/falling wedges) on which its based? For me, the answer was to look for wedges & if they happened to have a 5 point sequence then great, but if not & they're a clear wedge then trade them all the same - even better if they have a WW-style false break or two before the reversal.

[slipshod]

Some random thoughts on EURUSD Daily:-

[WideEyed]

Seidenesq? Something to do with Sam Seiden?

So you've noticed that when a WW fails there's a strong move in the other direction? I haven't noticed that. Perhaps because I wasn't looking. I shall keep an eye out for that now.

[slipshod]

Indeed, and here's an example. It was in trading this wedge that I first noted the phenomenon, and have seen it dozens of times since.

[WideEyed]

The big wedge was a perfect form. That double 5 isn't an issue as it wouldn't have existed when one tool the trade at the first 5.

Wolfe did recommend that when a counter wave is formed (in the same time frame) that it cancels the first wave.

[slipshod]

Indeed he did, but where's the counter wave? Not every reversal (or continuation) requires wedges/waves. They're just one pattern among many.

Here's another example of a failed WW and what happened afterwards:-

[slipshod]

Time for a bunch of chart updates. If there's anything you'd like me to look at that I haven't covered recently please let me know - I'm taking requests

[WideEyed]

Thanks.

I've been researching the angle of the 1-3-5. What I've found so far is that the closer to the horizontal this line is the greater the chance of the WW doing the right thing.

I'm still gathering my data.

[Fable]

Indeed he did, but where's the counter wave? Not every reversal (or continuation) requires wedges/waves. They're just one pattern among many.

Here's another example of a failed WW and what happened afterwards:-

One way I use to prevent this is to put some partial close at the level of the Wave 4 (or at least a BE), works fine.

Regards, thanks for this thread !

Fable

[slipshod]

Hi folks and folkesses, time for a bunch of chart updates (its been a while)...