We had a discussion on'Gaps' the other day in the comment section of a past post.
Recently I was watching the 1990 classic , 'Dances with Wolves' (starring Kevin Costner), It struck me to check out the 'Wolfe Waves' as the Daily chart flashed in front of me. Let's check it out .
What are Wolfe Waves -
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.
- 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).