As discussed in our latest webinar, Wolfe Waves are a 5-wave pattern which shows supply and demand as price moves towards an equilibrium. In essence, Wolfe Waves rely on three tops and two bottoms or the reverse, pointing to the correct direction, in order to evaluate where the next move is going.
For the NZDCHF pair, points 1 and 3 have been identified as the tops of a potential bearish Wolfe Wave, while points 2 and 4 appear to confirm this formation, given that they satisfy the Wolfe Wave conditions. The two lines extended from points 1-3 and 2-4 respectively converge, once extended, to set the ETA, which is found to be at approximately 19:00 server time tonight. The extension of the line from points 1-4 sets the expected equilibrium price, which is found to be at 0.6873.
Wolfe Wave Pattern (Image)
However, the price does not need to touch the EPA line at exactly ETA, while the price can also reach ETA without reaching the EPA level. These known pitfalls of fundamental analysis suggest that traders need to be careful, especially in days where volumes are low, such as today. While the RSI and the MACD, along with the SMA crossing the LMA at 10:00 server time, show signs of bearish behaviour, traders need to follow proper risk management rules in order to minimize their downside.
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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
For the NZDCHF pair, points 1 and 3 have been identified as the tops of a potential bearish Wolfe Wave, while points 2 and 4 appear to confirm this formation, given that they satisfy the Wolfe Wave conditions. The two lines extended from points 1-3 and 2-4 respectively converge, once extended, to set the ETA, which is found to be at approximately 19:00 server time tonight. The extension of the line from points 1-4 sets the expected equilibrium price, which is found to be at 0.6873.
Wolfe Wave Pattern (Image)
However, the price does not need to touch the EPA line at exactly ETA, while the price can also reach ETA without reaching the EPA level. These known pitfalls of fundamental analysis suggest that traders need to be careful, especially in days where volumes are low, such as today. While the RSI and the MACD, along with the SMA crossing the LMA at 10:00 server time, show signs of bearish behaviour, traders need to follow proper risk management rules in order to minimize their downside.
Come join us today at HotForex
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.