Bearish Wolfe Wave MT4

This indicator was developed by Bill Wolfe and for the past 10 years, he has been using it to trade on the S&P. It is considered to be part of the group of indicators used by swing traders. This movement creates a definite wave with valuable projecting capabilities

Wolf wave pattern consists of 5 alternating waves, which form a channel or an ascending/descending wedge. Trend lines fan out from the first point in the wave which is used for entry and exit points.

Where to place the Stop Loss

As the entry of the trade only starts once the price has crossed back into the wedge a stop can be placed just above point 5 on a bearish setup and below on a bullish setup. With a tight stop loss, this strategy can produce a very high risk to reward trades.

Anything to look out for?

I have found when trading this pattern that if you have two wolfe waves giving a very similar point 5 over two different time lengths, this provides a further confirmation. From my experience, this offers the highest probability the target will be met. On the first and below examples, you have a double confirmation for the first setup.

Counting Waves – Bearish Pattern

  • Before the first point, the pattern starts with an uptrend and reverses at the point.
  • The second point forms below the wedge.
  • The price reverses and hits point 3 on the upper level of the wedge.
  • A reversal back down to the bottom level for point 4.
  • Another reversal up to point 5 just past the upper level of the wedge.
  • Once the price crosses back into the wedge, you would look to go short, with a target at the bottom level of the wedge.

Bearish and Bullish Patterns


Counting Waves – Bullish Pattern

  • Before the first point, the pattern starts with a downtrend and reverses at the point.
  • The second point forms above the wedge.
  • The price reverses and hits point 3 on the lower level of the wedge.
  • A reversal back up to the top level for point 4.
  • Another reversal down to point 5 just past the lower level of the wedge.
  • Once the price crosses back into the wedge, you would look to go long, with a target at the top level of the wedge.
Bullish and Bearish Wolfe Wave Pattern
Bullish Wolfe Wave MT4
Bullish and Bearish Wolfe Wave MT4 Chart

The Wolfe Wave Indicator