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The types of Wolfe wave pattern were discovered by Brian and Bill Wolfe and introduced by a veteran trader and market wizard Linda Raschke. The trading strategy that gives a high profit to loss ratio comes under the Wolfe Wave strategy. Wolf Wave strategy enables us to make predictions regarding the price and the time can also be estimated to attain or reach that price. So Wolfe Wave trading can also be named as a market-timing tool. Value changes suddenly that is experienced by the security, keeping it view specific pattern are plotted. When the four waves are plotted, a new “Breakout” will be expected by the trader. The profit target line is created by a line between the first and fourth points and the line is further projected to the breakout point. This gives us the future expected price and time of that price to occur.
These rules will help us with the chart pattern that shows some symmetry. Following are the Wolfe Wave’s characteristics
Wolfe Wave is a Reversal Pattern.
Now it comes to the most important point of forex technical analysis. Without confluences, nothing will work. Only with confluence, we can increase the probability of winning trade. I will explain with points for a better understanding of the Wolfe wave pattern.
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Note: All the viewpoints here are according to the rules of technical analysis. we are not responsible for any type of loss in forex trading.
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