Wolfe Waves Trading Pattern

Wolfe waves are trading patterns which occur naturally in all financial markets. Wolfe waves are considered as one of the most reliable trading pattern for finding the trends, supporting and resistance levels, possible equilibrium price range and the breakouts. Wolfe waves are created as a result of both short-term and long-term trading, as thus can be useful to any type of traders trading any product.


A five point wolfe wave is the complete wave consisting of 5 waves with equal time intervals and symmetry. A bearish trend consists of 3 bearish and 2 bullish trends and a bullish trend consists of 3 bullish and 2 bearish trends. The waves must fulfill certain regulations

1. The range of wave 3-4 must equal to that of wave 1-2.
2. There should be regular intervals between all waves.
3. Waves 3 and 5 should show Fibonacci relationship (127% or 162%) with previous channel points.
4. Wave 5 should extend beyond the trend line formed by wave 1 and 3.

The channel formed by the first three waves is the support and resistance levels. The point 5 is the breakout point and is the best time to buy or sell. The point six, which is derived by connecting the points 1 and 4 with the 5th wave; it is the most profitable position. Remember the success with wolfe wave depends on how accurately it is identified.

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