what is a wolfe wave 
a wolfe wave is a chart pattern composed of five wave patterns in price that imply an underlying equilibrium price investors who use this system time their trades based upon the resistance and support lines indicated by the pattern image by sabrina jiang investopedia 2021understanding wolfe waveswolfe wave patterns were first identified by bill wolfe and his son brian according to wolfe they occur naturally in all markets to recognize them traders must identify a series of price oscillations that correspond to specific criteria in a wolfe wave pattern the fifth wave breaks out of the channel according to the theory behind the pattern a line drawn from the point at the beginning of the first wave and passing through the beginning of the fourth wave predicts a target price for the end of the fifth wave if a trader properly identifies a wolfe wave as it forms the beginning of the fifth wave represents an opportunity to take a long or short position the target price predicts the end of the wave and therefore the point at which the trader aims to profit off the position identifying complex patterns using technical analysistechnical analysis makes use of chart patterns such as wolfe waves to predict market movements and time trades for maximum profit traders who use technical analysis look at charts depicting price movements for securities over a period of time in general technical analysis rests upon theories of supply and demand which imply certain price levels above or below which securities will struggle to trade levels of support correspond to prices low enough to attract enough demand to stabilize and raise share prices while levels of resistance correspond to prices high enough to cause shareholders to sell shares and take profits reducing demand levels and causing prices to level off or drop 