Every trader has what they call their ‘bread and butter’ setups. Setups with the highest probability. I specifically trade the ‘shock wave pattern’, a chart pattern i will publish soon to avail it to all aggressive traders interested. But when i find my shock wave pattern within the Wolfe wave, it one of my ‘bread and butter setups’.
Anyway, lets get to the main topic now. A wolfe wave is a strong reversal pattern but it can also be a great continuation pattern if it is formed in the corrective move. It is one of those chart patterns you have to be careful with when it forms especially when you are on the other side of the market.
Well, it can also be a pattern that you may add to your trading arsenal.  Just like the shock wave, there is strong mass psychology in the wave that makes it one of my favorites. You clearly see  and feel a shift in the sentiment from buyers to sellers and vice versa.
For those of you who don’t know how a typical Wolfe wave looks like: This is how it looks like

Below are a few examples of the wolfe wave in the market TODAY. Just like many other chart patterns, it appears on any financial instruments and any time frame.

Example 1: EURUSD, 1 minute chart

Example 2: GBPJPY, 15 minute chart

This article was triggered by a lot of bulls who were trapped on the GBPUSD last week. The price had rallied up quite well in the previous days until we saw a wolfe wave being confirmed and triggered heavy selling since last Thursday. Ok, Lets look at that more in detail below:

The daily price chart shows a nice wolfe formation . And then a great bearish candle that confirmed the sell entry which was a bright red light to the buyers. We are not yet to the target zone, i do think there is more chance for downside despite Trump’s ‘fire and fury’.
There is US Producer Price Index (PPI) news coming up at 12:30 GMT. If turns out higher than expected, we may have a swift flow to the down side.
New entries and trailing stop on the 4- hour time frame.
The 4-hour time frame shows a small congestion held by the blue trendline. Close below the trendline will give the next sell. If you are selling short term the first target can be around 1.29304 marked by the red horizontal line X
If the momentum stays strong, then  we can take a deeper level support zone around 1.28237 marked S which is my ultimate target. If it confirms as above Stop loss can be place at 1.30300 marked B.

If you you were already in the short like me here with 90 pips with Sl trailed to 1.30609, you may further move your stop to 1.30300 too after confirmation.

BUT in case the PPI news are released and they not good for the USD, Keep the SL on 1.30609 (price where my trailing SL is now), until price hits X. This is to protect you from the whipsaws caused by news volatility.

When price hits X, you may safely move your stop to 1.30300