What it is
WaveTrend is a popular community indicator, best known from the LazyBear version, built on ideas similar to the Channel Commodity Index. It produces smooth waves with clear extremes, which is why it is widely used to time pullbacks and reversals.
The main line (often called WT1) and the slower line (WT2) behave like a fast and slow pair: their crosses give the signals, and the zone where they cross decides how much weight the signal carries.
How it is calculated
1. Typical price = (high + low + close) / 3. 2. Work out a 10 period EMA of typical price (the channel average). 3. Work out a 10 period EMA of the absolute distance between typical price and that average. 4. Channel index = (typical price minus average) / (0.015 x that average distance). 5. WT1 = 21 period EMA of the channel index. WT2 = 4 period simple average of WT1.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Channel | 10 | 2 to 100 | The channel length used for the average and its distance. Shorter makes the waves quicker. |
| Average | 21 | 2 to 200 | The smoothing applied to the channel index. Higher is smoother and slower. |
How to read it
How to trade it
- 1
On a 15 minute gold chart, wait for both lines to drop below -60.
- 2
Enter long when WT1 crosses above WT2 on a closed candle, ideally at a support level such as the previous day low.
- 3
Stop below the swing low, for example 6 to 10 points on gold.
- 4
Take part profit when the lines reach 0 and the rest near +60 or at 2 times the stop.
- 5
In a strong downtrend on the 1 hour chart, skip these buys and use crosses down from above +60 instead.
The buy is cancelled if WT1 crosses back below WT2 and makes a new low under -60, or price closes below the swing low.
WickSpeak writes a plain-English reading of WaveTrend on the live candle: what it is, whether it is stretched or mid-wave right now, how to trade the reading and what would prove it wrong. In Playbook, a condition can check when WaveTrend crosses above or below its signal line, crosses above or below zero, stays above or below zero, or is rising or falling.
WickSpeak WaveTrend is one of the extra WickSpeak versions of the oscillators. The line is coloured by strength: faint when the reading is weak, glowing when it is strong, mint above the zero line and pink below it. Crosses of the zero line are marked only once the candle has closed, so a marker never vanishes after it appears. A gold marker shows a stretched reading, the strongest few percent of the indicator's own range. Divergences between price and the line are drawn on both the chart and the indicator, and a chip shows the same reading on a higher timeframe.
Best markets and timeframes
Popular on 5 minute to 4 hour charts of gold, indices, forex and crypto. It is most reliable in ranges and in pullbacks within a trend.
Common mistakes
- Buying every oversold cross in a strong downtrend.
- Treating a cross near 0 the same as one beyond +60 or -60.
- Changing settings to fit the last few signals, which rarely holds on new data.
Works well with
Questions traders ask
What are the best WaveTrend settings?
The common settings are 10 for the channel and 21 for the average, with overbought at +60 and oversold at -60. Some traders also mark +53 and -53 as a softer level.
What is the WaveTrend buy signal?
The main buy signal is the fast line crossing above the slow line while both are below -60. It shows a turn up from an oversold extreme.
Is WaveTrend the same as CCI?
It uses a similar calculation (distance from an average divided by average distance, scaled by 0.015) but adds smoothing and a second line. That makes it smoother than CCI.
Does WaveTrend repaint?
No, values for closed candles do not change. The live candle's value moves until the candle closes, so a cross is only confirmed at the close.