Wolfe Waves and Fibonacci

Was trying out an experiment. While this is just the first case I was able to document, the results sure seem interesting.

Wolfe Waves - Fib Entry-Projection

Observations:

Notice the confluence of the Fib zones, which indicate the entry point.

A rectangle was drawn from the bottom TL to where the price pierced the TL 1,4. The same was then copied down from the TL, showing where price would reach.

Crude Oil - Stay Calm, its just a temp spike

From a purely technical perspective; the current spike in Crude Oil Futures is seemingly just a temporary spike, which could be attributed to a weakening US Dollar. Note that the fundamentals haven't changed much, so the bearish mood for Crude oil continues.

Perhaps this spike can be better explained on the Hourly Charts.

Crude Oil Futures - H1 Chart

What's obvious from this is the fact that prices rallied up to the parallel TL of 2,4 projected from pivot 3. The drop down will be massive, but considering that CLM3 is soon coming to an end, it is better to make use of some tight target prices instead.

As such, potential immediate price points include 93.75, 93.28. The ride to the downside can continue all the way up to 90.75

Wheat Futures - TP Done

So Wheat futures finally hit the target price of 686. Below is the chart depiciting the wolfe wave completion. Here is the link to the trade set up.

Wheat Futures - Target Price done

We will now wait and see for price reversal to happen in order to long wheat futures.

Wheat Futures, July 2013 - Trade Set up

We see a Wolfe Wave pattern being formed on the H1 charts of Wheat Futures for July delivery. In the supporting chart below, the solid lines are the trend lines connecting waves 1, 2, 3, 4 and currently in the process of a Wave 5 completion.

Wheat Futures, July 2013

While this doesn't represent the actual WW trade, a good trade set up would be to short Wheat Futures, WN3 as the potential Wave 5 is projected at 677, rounding this off to 685 level.

Wolfe Wave - CLM3 - Short Term Trade Strategy, 14/05

Its no secret that the strong US Dollar along with the fact that demand for Crude Oil has reduced has pushed prices lower. In this short term trading strategy, we have the CLM3 futures on the H4 chart with a wolfe wave set up.

In the picture below, we see the Wolfe wave trend lines. The blue trend line represents the price projection, while the dotted black trend line above the 'triangle' was the estimated point of price reversal.

Crude Oil - H4 Chart, Short Term Trade Opportunity

As clearly see, price did indeed reverse at the region of 96.56. This marks the end of Wave 5 and the current move is downwards. Based on the above set up, we can expect Crude Oil prices to trade in the region of $85 and perhaps even lower. A target price level of $87.35 would be ideal for the moment and can be adjusted as more price bars are formed.

GBPCHF - Perfect Long

It looks like Hurst Exponent is indeed improving my confidence in the trades. (While CLM3 is still running, here is the GBPCHF trade that I took on yesterday evening. The gray/red/green lines are entry/stop/target levels.

GBPCHF Chart - Long Trade Analysis

While Stochs at times showed signs of price dropping (and evident from the two bars that formed the higher low), I held on to my trade.

In hindsight, this is wave 4 of Wolfe wave. There is still a bit of meat to take away from this trade, to ride it short. But for that, we need to wait for hurst to give us an indication of volatility (turn blue).

Stochs currently points to overbought level, but I think its just consolidating price in the current levels.


About Hurst: Notice again how during the 'Blue' period of Hurst, we see more of an upward push. I'm starting to think that whatever the dominating move will be during the volatile period in hurst, that will prevail once the market starts to trend again. This means, we cannot blindly go short on GBPCHF right now because Hurst still shows that there is a bit of upward move left (despite what Stochs say).

Next update... when CLM3 hits the target (its day 2 now and price is ranging, which is getting to be a bit frustrating).

Is Hurst Exponent the answer to false breakouts?

While i'm on the case for Light Crude Oil futures, wolfe wave, I want to touch upon a small discovery. Recently, I stumbled upon Hurst Exponent indicator. While i'll keep the mathematical details and its history away from this article (and you can just search for hurst exponent, should you be interested to learn more), I find this indicator to be quite an interesting addition when trading with Wolfe Waves.

Simply put, the Hurst Exponent is not an oscillator but rather gives probabilities of price action. So when Hurst is above 1.5, it indicators volatile markets, and when its below 1.5 it indicates a trending market.

What's important to note from Hurst indicator is the aspect of 'volatility' or 'choppy markets'

Those trading with Wolfe Waves or converging triangles would know how easy it is to get caught in a false breakout.

Well, fret no more because I think using Hurst can help you steer away from these choppy movements.

Look to the chart below and the vertical lines.

Hurst Exponent - Wolfe Waves

The indicator below is a variation of Hurst exponent, which I modified a bit more to make it more easy on the eye.

We're looking at the 1-hour chart and pay attention to the price action when Hurst was above 1.5, indicating choppy markets. Isn't it interesting to see that Hurst is blue just within our region of the wolfe wave pattern?

Also note how the choppiness ends just when price touches our 'sweet spot' and then moves down (as we expect it to) ????

While its too early.. i'll be playing around more with the Hurst exponent and wolfe waves and see how this indicator helps.

Wolfe Wave - Light Crude Oil, June 13

Its been a while since I updated this blog. I've been looking at the futures market and thought of posting this chart for the June 2013 Futures for Light Crude Oil. What caught my attention to Light Crude oil was the market noise yesterday after the Crude Oil inventories report was released. As we know by now, supply has outstripped demand in stockpiles, which has set the path for a nice downtrend.

The below chart is the 1 hour CLM3 chart with a perfect Wolfe Wave being formed. What we can observe from this chart is that price broke out of the 'triangle' and touched just into the estimated sweet spot. In hindsight, its a shame that I didn't manage to enter this trade a bit earlier on.

Anyways, better late than never. I have pointed out the explanations on the chart.

Light Crude Oil Futures, 2013