Wolfe Waves is a technical analysis tool based on price fluctuations proposed by Bill Wolfe.
Basic Structure
Wave 1: The initial rebound or decline in market trends, retreating after reaching a peak in an uptrend and rebounding after hitting a low in a downtrend, marking the starting point of the pattern. Wave 2: The correction to Wave 1, forming a low point in an uptrend by retreating from the high of Wave 1, and forming a high point in a downtrend by rebounding from the low of Wave 1. Wave 3: The main fluctuation of the market, forming a peak higher than Wave 1 in an uptrend and a low point lower than Wave 1 in a downtrend, reflecting the continuation of the market trend. Wave 4: As the corrective wave of Wave 3, its low point is below the low of Wave 2 in an uptrend and its high point is above the high of Wave 2 in a downtrend. Wave 5: The final fluctuation of the market, with strong directionality, breaking through the trend line formed by Wave 1 and Wave 3 in an uptrend, and falling below that trend line in a downtrend, indicating a price reversal.
Application Points
Confirming Validity: Look for divergences between price and oscillators such as the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD); the appearance of divergence supports the potential for reversal predicted by the Wolfe Wave pattern. If there is no divergence, the identified pattern may be invalid. 1. Combine with Other Tools: Due to the complexity and uncertainty of the market, Wolfe Waves are not absolutely accurate and should be combined with other technical analysis tools such as trend lines, volume, and fundamental analysis to comprehensively assess market trends and develop more reasonable trading strategies. #比特币市场波动观察