My Trading Journal - Wolfe Waves
I've been trading with Wolfe Waves for only a few months now but I find them to be one of the best ways to trade. My preference for Wolfe waves is due to the fact that I prefer to keep clean charts and the ETA/EPA was what got me into trading with Wolfe waves as a reason. I'm starting this journal here. It won't be frequent but when I do, do expect to see some really good trades.
There are failed WW's and great WW's. Its the filled Wolfe Waves that keeps my interest going. For example, when EURUSD touched 1.28 few days ago, I spotted this back in Feb (24/02 to be precise). Also more recently, March 19th, I managed to ride the Wolfe from 1.28 region with target price reached few hours ago at 1.30.
Bottomline is that, there is no holy grail and your best forex trading system is the one that you develop on your own.
Also i'd like to point out that I find some interesting observations regarding wolfe waves. Some of which I will point out in my trades. Besides Wolfe waves, I use Stochs/CCI to confirm price reversals at peaks and bottoms.
Regarding indicators, I use the regular ZigZag indicator. Hope that I will be able to add value to this forum and also encourage others to practice wave trading, whether its gartleys or elliott wave or wolfe wave.
I forgot to mention the reason behind this journal.
1) To encourage other members to comment and discuss the trades
2) To find potential weaknesses in the trade analysis
3) Discuss possible ideas or hacks, as i'd like to call them
4) There will be losing trades. The purpose of this journal is not the trade but to develop better analysis of Wolfe waves.
5) I use 5 digit broker so for clarity, 100 Pips on a 5 digit broker would be 10 pips for a 4 digit broker (just clarifying this before hand so as to avoid any confusion).
Last edited by derago; 03-25-2013 at 01:32 PM.
EURUSD - Bearish Outlook, March 22nd
Below is the EURUSD 1 hour chart. I've plotted the wolfe waves and it points to a bearish bias being developed. Expecting price to head to the regions of 1.291 - 1.286 and if this wolfe wave holds, then we could see a drop to 1.27 regions as well.
I'm a big fan of taking ETA as well because it helps as a comparison with the fundamentals. Currently, the WW pattern shows ETA of 24th March with 1.27 being the target zone. Unless we expect to see a gap again this weekend (Cyprus) its unlikely that the pair will drop to 1.27 by 24th March (I hope I am wrong on this).
The stoch is currently in the overbought area. I'm already in this trade, having gone short at 1.2984. The shaded area is where I expect price to reach.
Modification to Wolfe Wave
I basically plotted parallel lines for the 2, 4 and 1, 3, 5 trend lines. This gives a good idea on how far a wave is likely to go before reversing. We then look to stochs for price reversals.
XAGUSD - Bearish Outlook
Here's another trade that i'm already into. Silver/USD
What's interesting about this trade is that we are looking at a bearish bias with a possible price reversal coming soon (which can be seen on the weekly charts with a rising stoch).
Anyways, there are basically 3 Wolfe wave patterns here, with 2 short term on the H4 chart and 1 on the daily chart.
In the short term, we see some common points at Wave 5, which matches with both the short term wolfe wave patterns.
There are two ETA's, 25th March and 26th March. The possible price targets are in the region of 28.57 through 28.08. I'm not sure if its clear on the picture but i've plotted weekly pivots as well to get a better idea. We have support 1 and 28.42 and the weekly pivot at 28.57.
Given this, it might seem hard for silver to drop to 28.26 for example of even lower. 28.45 looks to be the most probable target point.
Now when we switch to the daily charts, we see price is in a ranging mode. However, the wolfe wave here points to a bullish bias. We have the monthly pivot at 29.63 with resistance 1 at 31.
Ideally, after the bearish run is over, we can expect price to reverse. I'll be looking at entering in the region of 29.63 and set my target price a few points below the monthly resistance of 31. The problem with the daily set up is that the ETA is way into the future (2014), so the daily chart trade will be taken up with caution.
XAGUSD - Trade Closed
XAGUSD - Trade Closed
The sentiment is slowly pointing to a bullish bias. Also the current market scenario is still kind of confusing, especially for the Euro.
XAGUSD Trade Details
Open Price: 29.08
Close Price: 28.844
EURUSD trade is still opened at this point.
AUDUSD - Getting ready to short
The Aussie dollar has been trading at monthly highs. On the daily chart we see that the uptrend is almost losing strength so we prepare to short this pair. The Aussie Dollar is currently trading between the monthly Resistance 1 and Resistance 2 (1.0386 - 1.0559) levels.
However, the H1 and H4 charts are still bullish, so we will wait for confirmation from these lower timeframe charts to short the AUDUSD.
On the daily charts, the Wolfe Wave shows a bearish wave pattern with ETA likely on 23rd May to reach the levels of 1.0 against the US Dollar.
Update on EURUSD
Just updating this trade with the updated ETA and EPA.
Expecting price to reach 1.279 by the 27th of March. Euro is presently bearish but there might be a possibility for a move to the upside.
Anyhow it seems like the 'sweetzone' (shaded area) is where the price moved up to. Stochs show a potential bearish rally (but not quite confirmed yet).
Shorting XAGUSD again
So now its clear that Silver is going drop. Short at 28.78, Stop at 28.95, TP @ 28.65
Last edited by derago; 03-25-2013 at 08:19 AM.
XAGUSD - Short Trade Done
XAGUSD Trade Details
Open Price: 28.78
Trade Closed. TP Reached
EURUSD - Closing Half the positions. 286 and 526 Pips Profits
The EURUSD has been performing amazing today. Maybe its largely due to the announcement that Cypriot depositors at Laiki bank will lose 30% of their deposits for accounts over 100k Euro.
So an update on the trade set ups:
Short Entry at 1.29841
Short Entry at 1.30091
Current Price: 1.29565
Closing 1 lot each for both the trades and moving stops to 1.30
Total Pips made:
Trade 1: 285
Trade 2: 526
EURUSD - Aiming for the Home run
I have to step out for the rest of the evening. Against the original plan of closing half the positions at daily support level 1, i've closed the trades few pips earlier.
Right now, I have 2 trades of 0.5 lots each. This will be let to run the rest of the course. Later in the day I hope to move my stops to the daily support level 1 (if hopefully price drops even more) and see how things go.
Remember that we are looking at 1.279 as the target price for March 27th. So let's see how it plays out.
50% of the position for both the trades are closed.
In terms of Pips made
Trade 1: 822 Pips
Trade 2: 570 Pips
Other running trades include AUDUSD, and pending orders on AUDCAD and USDCAD.
Have a nice evening everyone and hope you all had a profitable day.
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