Introduction
Channels are vivid examples of defining points of trade position opening and closing, allow conducting the estimation of the current situation for the trade decision making. Basic rules of decision making about trading in a channel inform well about price movements within a channel, but the absence of defined or formalized ruled prohibit detecting break out points, and this often catches traders unawares. For the identification of such places M and W models or Merill patterns, Gartley butterflies, Pesavento models and Wolfe waves are used.
Wolfe Waves. Defining and Marking Rules
Notwithstanding the uniqueness of the market, for the whole history of its existence there were empirically gathered repeating combinations of price, volume and indicators that are now called patterns. The analysis of patterns is based on one of axioms of the analysis of technical parameters of prices – “History repeats itself”. Patterns are also called figures or templates.
There are several types of patterns:
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undefined patterns;
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continuation patterns;
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reversal patterns.