Wolfe Wave is a price pattern that was discovered and popularized by Linda Bradford Raschke and is based on the idea that market prices move in waves and can be predicted. The pattern is made up of five waves, with wave 3 being the longest and strongest wave, and wave 4 retracing a portion of wave 3. The pattern is considered to be complete when price moves beyond the end of wave 4 and enters wave 5.A Wolfe Wave pattern is typically characterized by the following: -1- Wave 1: The first wave in the pattern starts with a reversal from a downtrend to an uptrend, or vice versa.2- Wave 2: The second wave is a retracement of wave 1, but it does not retrace all the way to the starting point of wave 1.3- Wave 3: The third wave is the longest and strongest wave in the pattern, and it moves in the direction of the trend established by wave 1.4- Wave 4: The fourth wave is a retracement of wave 3, but it typically only retraces a portion of wave 3, and not all the way back to the starting point of wave 3.5- Wave 5: The fifth wave is the final wave in the pattern, and it moves in the same direction as wave 3, typically to a new high or low, depending on the trend established by wave 1.Trading strategies based on the Wolfe Wave pattern typically involve buying or selling at the end of wave 4, and taking profit at the end of wave 5. It is important to note, however, that the pattern is not always reliable, and that other factors such as market volatility, economic data releases, and geopolitical events can also impact market prices.It's also important to note that the Wolfe Wave pattern is not widely recognized or widely used by professional traders and market participants, and that its predictive ability is somewhat controversial. As with any technical analysis tool, it's recommended to use the Wolfe Wave pattern in conjunction with other indicators and analysis, and to have a clear understanding of the risks involved, before making any trading decisions.
