Market tops and bottom | Weis wave indicator

Using the Weis Wave Indicator to Identify Market Tops and Bottoms

The Weis Wave indicator was developed by David Weis to help traders objectively identify market tops, bottoms, and trend changes. By examining waves and retracements, traders can gain insight into emerging supply/demand dynamics.

Overview of the Weis Wave

The Weis Wave consists of five parallel channel lines plotted over the price bars:

  • Line 1 - 30-period high
  • Line 2 - 30-period close
  • Line 3 - 30-period open
  • Line 4 - 30-period low
  • Line 5 - baseline (-3 × Average True Range)

Waves form as the price oscillates between the channel lines signaling shifts in control between bulls and bears

How to Use the Weis Wave

Analyzing where the current wave terminates relative to the prior wave provides objective buy and sell signals.

Potential Bottoms

  • Wave ends below the end of the previous wave (Line 1-5)

Potential Tops

  • Wave ends above the end of the previous wave (Line 5-1)

Divergences between indicator and price show loss/gain of momentum predicting impending reversals.

Identifying Trend Changes

The Weis Wave highlights trend changes through formation of distinct chart patterns:

  • Above 3-below-3 - Bullish pattern signaling uptrend
  • Below 5-above-5 - Bearish pattern signaling downtrend

These transitions represent key moments for traders to reorient themselves relative to the developing trend.

Final Thoughts

The Weis Wave transforms the chaos of the markets into clearly defined waves granting structure for objectively determining high probability long/short entries, exits and trend changes.

Skillful use of this indicator provides a reliable system for confirming market tops and bottoms.

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Market tops and bottom





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