Thursday, September 06, 2007

Wolfe Wave theory

Wolfe Wave theory

For ALL the Newbees and Honeybees,

In technical analysis, Wolfe Wave 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.

To identify Wolfe waves, they must have the following characteristics:

The 2 point is a top.

The 3 point is the bottom of the first decline.

The 1 point is the bottom prior to point 2 (top), that 3 has surpassed

The 4 point is the top of the rally after point 3.

The 5 point is the bottom after point 4 and is likely to exceed the extended trend line of 1

The Estimated price is a price along the trendline created by waves 1 and 4 (point 6)

The Estimated Time of Arrival (ETA) is apex of extended trend line of 1 to 3 and 2 to 4.










These are only for the NIFTY ONLY,u can calculate for stocks also.
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