Wolfe Wave & Scan for Wolfe Wave
Wolfe Wave for ThinkorSwim
This is a zero-lag indicator that relies on price-action alone. It automatically identifies and draws the Wolfe Wave pattern in real time.
The Wolfe Wave is a price pattern that was first identified by Bill Wolfe and later popularized by market wizard Linda Raschke.
Linda briefly describes the pattern in an interview she did for Opening Bell Monthly. After reading her interview, I recommend reading the free ebook, “Seeing the Future,” that was put out by the originator himself.
This indicator will work on any chart time frame and with any instrument (stocks, futures, currency pairs, etc.) A few more examples are shown below.
The indicator includes a user-setting that allows for the wavelength to be adjusted. The larger the number, the longer the identified waves will be. Below is a screenshot demonstrating the difference between a wavelength of 5 and one of 13. The same stock and time frame is used for both.
Quickly find potential trades with the Wolfe Wave scan
All five patterns (4 harmonics and 1 Wolfe) are reversal patterns that try to identify potential reversals. However, the criteria for each is different. True, they are all composed of 5 distinct legs, but, again, the setups are different.
The numbering is really irrelevant. One chose to label the points with numerals while the others use letters. No matter, they all have to start somewhere. The harmonics start with X and the Wolfe starts at 1.
For a bullish reversal, all the patterns start with an upward move followed by a pull-back (decline). It is from this point that the patterns differ.
The bullish Gartley, for instance, begins at point X, then rises to point A, then declines to point B. The rules for the Gartley specify that point B must be a 61.8% reversal.
The bullish Wolfe wave, on the other hand, begins at point 1, then rises to point 2, then declines to point 3. The rules for the Wolfe wave specify that point 3 must be lower than point 1 was. So, the Wolfe wave, initially, begins with a >100% reversal.
The remaining points of each pattern have specific criteria that must be met as well. The bottom line is that while all five patterns contain 5 legs, they each have different rules governing their formation.
Finding potential Wolfe Wave trades just got a whole lot easier
Users really love the Wolfe Wave indicator and the question I have been asked most often has been if I had a way to scan for that pattern. Until now, my answer has always been, “Unfortunately, I don’t; because the script is too complex for the scan tool.”
I am extremely pleased to announce that after some creative thinking—and a lot of trial and error—I have, finally, created a more streamlined algorithm that will work with the scan tool.
You are now able to quickly and easily search for potential Wolfe Wave trades on any time-frame that is supported by the scan tool. The scan tool will even allow you to setup email or phone alerts if you want.
This indicator is intended to be used as a companion to the Wolfe Wave indicator.
Start scanning for potential trades now.
How to setup a custom scan
This tutorial will demonstrate how to scan for stocks that have potential Wolfe Wave setups and meet the following criteria:
- The stock is a part of the S&P 500 index
- The stock is priced above $50
- The stock is set to a 15 minute chart
Import the Wolfe Wave scan script
note: this step only needs to be completed once.
Setup the scan
Start with a fresh scan and follow the steps below