Volatility Whip

What is a Vol Whip? It is a calibration after a wave structure, that consists of two full lambda moves – one in each direction and defines a trading range.

The VW is not part of any wave structure.

The wave structure ends with the extension move.

Let’s look at the following inverted head and shoulders to put things in perspective.

The purple-white line is the 22-pip buy line of the last swing high above the E-16

The three zeros represent the head and shoulders terminals.

The one on the left with the corresponding red bar (below) is the left shoulder or the overdrive.

The head that sets up the divergence in the middle, does not register anything on the stochastic bars. It finishes the wave structure down.

What follows is the volatility whip that prints the right shoulder in the process. Wave 1 up was started when the volatility whip’s terminal points got exceeded by more than a fake out size (5 pips+).

Remarks: the right shoulder can surpass the terminal point of a Wave Structure, yet it would not become part of it.

I have been talking about the relationship between outmost reading the wave 3 printed and the extension (that wave 5 ends up with): they do not in general get spaced further apart than the instrument’s fluctuation maximum reading.

In the case of the EUR/USD the fluctuation size is 32 pips and so 1/4 more would mean a healthy fake out on top of this = 40 pips. Nothing scientific about this, it is merely things you might notice.

There are the likely extension sizes, and this is how I came up with the 4, 16, 26 and 36 pips failures.

I don’t often draw trend lines

Feel free to check if there was a 16-pip failure between Bam and Boogie on this wave up.