Here's a 60min chart of the U.S. Dollar Index (DXY) that seemed to have set up a bearish Wolfe Wave recently.
Important points to take notice of include;
-the #5-point coincided with a prior level of resistance
-the target line (red) is very extended to the downside. So if you were to have taken this trade setup (or any Wolfe Wave for that matter), rather than look at the target line for an EPA, you should be aware of potentially strong support areas ($75 in this case) that may prevent price from achieving it's target (though this issue still has time to reach that target line).
8 comments:
Can't get enough of your wolfe, Todd LOL!
I'm lazy. I took the short cut by following your posts...I was having a hard time spotting bear wolfe patterns until you showed one sometime last week :-)
So please keep them coming!
Todd, nice work on Wolfe patterns. I've been stalking the XME as a proxy for the inverse dollar and I wonder if you think this looks like a bearish Wolfe. SPX looks similar for that matter.
http://starwealth.blogspot.com/2009/12/xme-bearish-wolfe-wave.html
Be honest... if it's a mess, tell me. Thanks.
Hi Tony,
Included below are links two snapshots I saw in XME.
The first is a longer term bullish wolfe wave that developed and is getting caught up achieving it's target due to resistance.
http://www.screencast.com/users/fufufnik/folders/Jing/media/5c1afc30-f8bd-404a-ab97-4565c0221d11
As I see it, the 5-point has yet to be achieved on the bearish Wolfe Wave that you point out.
http://www.screencast.com/users/fufufnik/folders/Jing/media/f650c59b-a878-4e1c-85fa-c57e944bb9e4
Thanks for pointing it out Tony.
I love those Wolfe Waves!
-todd
Thanks for the chart review. So, Point 5 has peak ABOVE the trend line from 1 to 3? Is that right?
Yes sir,
It's called the "Sweet Spot." Where you want to take action and where the squeeze sets up.
TYVM. Nice blog.
Thanks Tony, you're welcome.
-todd
BTW, I gave you some props at the end my last entry (for the 4 people who read mine! lol)
http://starwealth.blogspot.com/2009/12/spy-bearish-wolfe-wave.html
I'm just learning this pattern... I'm still not sure of the sentiment behind the pattern: maybe Wave 5 is like a capitulation move, like you said, the "squeeze", that then quickly reverses.
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