The Wolfe Waves Indicator automatically identifies Wolfe Wave formations — a five-point price pattern based on the ZigZag indicator. The pattern is structurally related to the Wedge formation in technical analysis, but with a specific directional requirement: a bearish Wolfe Wave pattern requires the wedge to tilt upward, and a bullish pattern requires it to tilt downward.
The indicator identifies Wolfe Wave formations by evaluating five structural points derived from the ZigZag output.
Bullish formation — price forms two ascending peaks (points 1 and 3, with point 3 higher than point 1) and two ascending troughs (points 2 and 4, with point 4 higher than point 2). The wedge formed by these points tilts downward. A bullish condition is registered when price breaks below the trough level formed by points 2 and 4 — a red downward arrow appears on the bar where this level is broken.
Bearish formation — price forms two descending troughs and two descending peaks in the equivalent inverse structure. The wedge tilts upward. A bearish condition is registered when price breaks above the peak level formed by points 1 and 3 — a green upward arrow appears on the bar where this level is broken.
The proportions of the formation must fall within defined tolerance limits for the pattern to be considered valid. If the structural proportions do not meet the criteria, no directional marker is displayed. The tolerance parameters are configurable in the ZigZag settings.
In addition to the directional marker, the indicator calculates and displays a projected structural reference level based on the geometry of the formation.
To determine this reference, the indicator draws two lines through the wave points: one connecting points 1 and 3, and another connecting points 2 and 4. The bar at which these two lines converge is the structural target bar. A third line — connecting point 1 to point 4 for bullish formations, or point 1 to point 4 for bearish ones — intersects with a vertical line at the target bar. The price level at this intersection represents the structural reference level projected by the pattern geometry.
This reference level reflects the mathematical convergence of the wave structure — it does not guarantee that price will reach or reverse at this level.
Wolfe Waves typically form during extended consolidation phases following a directional move. During these periods, price continues testing new levels in the direction of the prior move, but with decreasing amplitude — each successive swing fails to extend as far as the previous one. The wedge shape that forms during this process reflects a structural narrowing of price movement.
The indicator tracks the breakout of the wedge boundary — the level formed by the two peaks or two troughs. When price breaks through this boundary after the wedge has formed, this is the structural event that triggers the registered condition.
The dashboard is displayed in the lower left corner of the chart and shows the current condition status across all monitored assets and timeframes in a structured table — assets in rows, timeframes in columns.
Each cell shows the directional context of the most recently registered condition — bullish or bearish — and the number of bars back at which it was registered. Clicking any cell updates the chart to the corresponding asset and timeframe directly.
Monitored instruments must be entered in the properties window as a comma-separated list and must be present in the terminal’s Market Watch window. Timeframes are enabled and disabled individually in the same properties window.
The indicator has the following parameters:
Assets — instruments to include in the scanner, entered as a comma-separated list.
Enable_M1–MN — include or exclude individual timeframes from the scanner scope.
Max_bars — limits how far back the scanner evaluates formations. Reducing this value improves calculation speed.
Enable alert / Enable email / Enable mobile — alert delivery: platform notifications, email, or mobile — each configurable independently.
ZigZag settings — configures the core ZigZag parameters used for peak and trough identification, including depth, deviation, and backstep values.
Indicator Limitations
Wolfe Wave detection is based on ZigZag-derived structural points and geometric proportion criteria applied to historical price data. The indicator identifies formations that meet the defined structural criteria — it does not predict future price movement or guarantee that a registered condition will result in any particular price behavior. The projected target level reflects the mathematical convergence of the wave geometry — not a forecast. Pattern validity depends on ZigZag parameter settings, and different configurations will produce different formation counts. All registered conditions should be evaluated within a broader analytical framework.
We can customize this indicator to your requirements by adding new features, modifying calculation logic, or combining multiple tools into a unified solution.
We also develop automated trading strategies (Expert Advisors) based on custom logic. The system can include configurable management modules such as dynamic risk parameters, multi-stage trailing stops, additional confirmation filters, and other custom functionality based on your specifications.
The final solution is delivered with full source code and post-delivery support. Contact us for a free consultation to discuss the scope and timeline of your project.
We are committed to the ongoing development and refinement of our indicators. If you’ve spotted a bug, feel that something essential is missing, or have ideas that could make the indicator even better, just send us a message. Your feedback helps us improve and deliver tools that truly meet traders’ needs.
Nordman Algorithms is a trade name of Nordman Algorithms OÜ (Reg. No. 14435535), registered in Tallinn, Estonia.
Software Nature & User Responsibility — Nordman Algorithms provides algorithmic software tools for technical analysis. Nordman Algorithms is not a financial advisor and is not liable for any losses. All trades conducted based on the software’s output are executed at the user’s sole discretion and risk.
Visual Markers & Signal Disclosure — This software may display visual markers (such as arrows, dots, or alerts) when predefined mathematical conditions are met. These markers are provided for educational and analytical purposes only, must not be interpreted as financial guidance, and do not constitute a recommendation to buy, sell, or hold any financial instrument. Users must independently validate all visual cues within their own trading methodology.
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