Wave Theory

Thread by Dr Cat@DoctorCatX · Aug 2, 2025 · 14 posts · 1,370 words · 9 min read

Wave Theory [Ichimoku Thread #15 🧵👇]
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1 / 13 When people hear "Wave Theory" they normally think of Elliot Wave Theory which is very widely used. But very few people know that Ichimoku has its own Wave Theory, which in fact has some similarities to EWT but also its differences. ❓ What does Ichimoku's Wave Theory do? It classifies and studies different Wave Types and the way they join between each other and based on that gives us a hint to which direction the market should make the next move. There are three base wave types according to Ichimoku's Wave Theory: I, V and N. There are also other more specific wave types: P, Y, S and Box Range.
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2 / 13 I wave I wave looks like the letter I:
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3 / 13 V wave V wave is a combination of two I waves:
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4 / 13 Box range Box range is a directional straight wave followed by a consolidation. As a bull/bear flag as in Classical Chart Patterns:
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5 / 13 P wave (Also called Contracting Wave) P wave has three variations: 1⃣Regular P wave It has lower highs and higher lows, as a symmetrical triangle in Classical Chart Patterns. Regular P waves tend to break to the direction of the trend, or simply based on the position of Tenkan Sen above Kijun Sen. I.e. if Tenkan Sen is above Kijun Sen the expected breakout is to the upside: 2⃣Bullish P wave The Bullish P wave has a flat resistance line and ascending higher lows. As an Ascending Triangle in Classical Chart Patterns. Bullish P waves tend to break to the upside. 3⃣Bearish P wave The Bearish P wave has a flat support line and descending lower highs. As a Descending Triangle in Classical Chart Patterns. Bearish P waves tend to break to the downside.
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6 / 13 Y wave Y wave has also three subtypes: regular, bullish and bearish. The regular Y wave has the form of a megaphone. It has lower lows and and higher highs. Simply based on its type Y wave it's hard to forecast to which direction it will break. The Bullish Y wave has the form of an inverse head and shoulders on a steep (non-flat) trendline. I.e. lower low making it expanding but followed by a higher low. Bullish Y waves tend to break to the upside. Bearish Y waves are the opposite: as Head and Shoulders on descending surface: high, higher high lower high. They tend to break to the downside.
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7 / 13 N wave N wave is the most important wave. It's the single building unit of the trend. N wave is a complex wave built by other waves. It could be I + I +I = I + V = N. Or, it could be some of the other wave types like P, Y, Box range, breaking out with an extra I wave and turning into an N wave. ⚠️As a trend unit, it's extremely important to understand that an N wave must have a higher high, higher low on an uptrend. And a lower low, lower high on a downtrend. For example, if during a supposed uptrend you have I wave which is followed by two other I waves which instead of a higher low set a lower low, this is NOT an N wave, but simply three I waves.
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8 / 13 S wave The S wave has the shape of the letter S. It may turn into an N wave eventually, but what makes it different is that it has a higher low (for a supposed downtrend) and a lower high for an uptrend. If the low is taken and it becomes a lower low, this S wave will become a bearish N wave:
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9 / 13 Sandan 📚Sandan is the basic structure of the trend as per Ichimoku's Wave Theory. One trend has one Sandan. 3⃣🌊 "San" means "three" in Japanese. One Sandan consists of three linked overlapping N waves. Technically, they look rather as two overlapping N waves due to the overlap. You can think of them as three directional waves linked in a chain of N waves: In a sense, this is similar to the concept of EWT where one trend consists of 5 waves, of which 3 are impulsive (1, 3, 5) and 2 corrective (2 and 4). ⚠️However, there is one big difference between IWT and EWT. Namely, EWT always claims to be right in hindsight and if the count is wrong the waves must be recounted. While Ichimoku does not tell us that 100% of the trends have exactly 1 Sandan, but that this is most likely. 4⃣In fact, some trends extend with a 4th N wave, or with multiple Sandans. 🫴 But, if you see an N wave starting a new trend, it's likely to expect at least one more directional wave to form a Sandan with three overlapping N waves. (Because by the time the first N wave forms, there are already two directional waves - because of the overlap). 👀So this wave count is a hint where the trend can reverse. When you see a completed Sandan you LOOK FOR a reversal (but don't expect it necessarily). 🚀 But, if you see that a healthy trend as per the five lines indicator is starting to form a 4th N wave, then there is a good chance another Sandan appears on top of the first, so one more directional wave should come.
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10 / 13 Here is a practical example of how to use the Wave Theory in a combination with the Time Theory. On the 9th of July 2024, at 53K, I posted a scenario which I subsequently posted that becomes my primary scenario, that $BTC should have one dead cat bounce on the weekly chart setting a lower high and eventually dump setting a lower low between the 5th and 26th of August: https://x.com/DoctorCatX/status/1810635182069653859 N.B. Actually the forecast should have been for the 5th to 25th of August as I mistyped the deadline by one day but it doesn't matter as it played out perfectly. 🫴The price pumped from 53K to 70K, set a lower high and dumped below the previous weekly low to 49K exactly on the 5th of August. 🎯 This was a perfectly accurate forecast made almost one month in advance. 📚So here is the explanation behind it: 1⃣📈First, we see that the market formed one Bullish Sandan. It didn't reverse, but broke the kumo and formed a second Sandan. So, it was a time to look for a reversal in March anyway. ⚠️🐻 After this, the market formed a bearish N wave. So we have already two hints for an upcoming reversal and lower low. 📉📉📉After a completed Sandan/Uptrend, the market forms a bearish N wave. So a bearish Sandan may come and we expect at least one more directional bearish wave to complete three overlapping N waves. This was the hint that the bottom was not in and a lower high was coming. As you see, it played out perfectly:
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11 / 13 ❓How about the timing aspect of this forecast? 🫴 Well here we use the time cycles and see that the market has been manifesting 16 and 15 cycles for the last two weekly cycles. Which is a Kihon Suchi 17 or Taito Suchi 15-16. So, it makes sense the next low to be on week 15-19 (17 +-2). And exactly, it happened on Monday of week #15 which was the 5th of August 2024. Now you see how powerful is Ichimoku when you combine the different elements of the system.
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12 / 13 This Thread covered Ichimoku's Wave Theory. If you found it useful feel free to share it so the knowledge can reach more people.
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9 / 9 Previous lessons 1. The Ichimoku TA system https://x.com/DoctorCatX/status/1807703250189099208 2. Tenkan Sen https://x.com/DoctorCatX/status/1810173264020328553 3. Kijun Sen https://x.com/DoctorCatX/status/1813659904688685089 4. Real and fake TK crosses https://x.com/DoctorCatX/status/1815295282793390287 5. SSA https://x.com/DoctorCatX/status/1817833046088843737 6. SSB https://x.com/DoctorCatX/status/1822907741918175638 7. Kumo https://x.com/DoctorCatX/status/1827755204713865373 8. Chiko Span https://x.com/DoctorCatX/status/1830540632428827015 9. Sanyaku Signals https://x.com/DoctorCatX/status/1834528626513006837 10. Forecast lines https://x.com/DoctorCatX/status/1938597387024343199 11. Trend and range https://x.com/DoctorCatX/status/1945938009322336349 12. Key levels for visit and reversal https://x.com/DoctorCatX/status/1946341925679743281 13. Bull and bear traps https://x.com/DoctorCatX/status/1946533654651666694 14. Time Theory https://x.com/DoctorCatX/status/1951664247093473794
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Wave Theory

Thread by Dr Cat@DoctorCatX · Aug 2, 2025 · 14 posts · 1,370 words · 9 min read

Wave Theory [Ichimoku Thread #15 🧵👇]
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1 / 13 When people hear "Wave Theory" they normally think of Elliot Wave Theory which is very widely used. But very few people know that Ichimoku has its own Wave Theory, which in fact has some similarities to EWT but also its differences. ❓ What does Ichimoku's Wave Theory do? It classifies and studies different Wave Types and the way they join between each other and based on that gives us a hint to which direction the market should make the next move. There are three base wave types according to Ichimoku's Wave Theory: I, V and N. There are also other more specific wave types: P, Y, S and Box Range.
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2 / 13 I wave I wave looks like the letter I:
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3 / 13 V wave V wave is a combination of two I waves:
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4 / 13 Box range Box range is a directional straight wave followed by a consolidation. As a bull/bear flag as in Classical Chart Patterns:
5/14View on X
5 / 13 P wave (Also called Contracting Wave) P wave has three variations: 1⃣Regular P wave It has lower highs and higher lows, as a symmetrical triangle in Classical Chart Patterns. Regular P waves tend to break to the direction of the trend, or simply based on the position of Tenkan Sen above Kijun Sen. I.e. if Tenkan Sen is above Kijun Sen the expected breakout is to the upside: 2⃣Bullish P wave The Bullish P wave has a flat resistance line and ascending higher lows. As an Ascending Triangle in Classical Chart Patterns. Bullish P waves tend to break to the upside. 3⃣Bearish P wave The Bearish P wave has a flat support line and descending lower highs. As a Descending Triangle in Classical Chart Patterns. Bearish P waves tend to break to the downside.
6/14View on X
6 / 13 Y wave Y wave has also three subtypes: regular, bullish and bearish. The regular Y wave has the form of a megaphone. It has lower lows and and higher highs. Simply based on its type Y wave it's hard to forecast to which direction it will break. The Bullish Y wave has the form of an inverse head and shoulders on a steep (non-flat) trendline. I.e. lower low making it expanding but followed by a higher low. Bullish Y waves tend to break to the upside. Bearish Y waves are the opposite: as Head and Shoulders on descending surface: high, higher high lower high. They tend to break to the downside.
7/14View on X
7 / 13 N wave N wave is the most important wave. It's the single building unit of the trend. N wave is a complex wave built by other waves. It could be I + I +I = I + V = N. Or, it could be some of the other wave types like P, Y, Box range, breaking out with an extra I wave and turning into an N wave. ⚠️As a trend unit, it's extremely important to understand that an N wave must have a higher high, higher low on an uptrend. And a lower low, lower high on a downtrend. For example, if during a supposed uptrend you have I wave which is followed by two other I waves which instead of a higher low set a lower low, this is NOT an N wave, but simply three I waves.
8/14View on X
8 / 13 S wave The S wave has the shape of the letter S. It may turn into an N wave eventually, but what makes it different is that it has a higher low (for a supposed downtrend) and a lower high for an uptrend. If the low is taken and it becomes a lower low, this S wave will become a bearish N wave:
9/14View on X
9 / 13 Sandan 📚Sandan is the basic structure of the trend as per Ichimoku's Wave Theory. One trend has one Sandan. 3⃣🌊 "San" means "three" in Japanese. One Sandan consists of three linked overlapping N waves. Technically, they look rather as two overlapping N waves due to the overlap. You can think of them as three directional waves linked in a chain of N waves: In a sense, this is similar to the concept of EWT where one trend consists of 5 waves, of which 3 are impulsive (1, 3, 5) and 2 corrective (2 and 4). ⚠️However, there is one big difference between IWT and EWT. Namely, EWT always claims to be right in hindsight and if the count is wrong the waves must be recounted. While Ichimoku does not tell us that 100% of the trends have exactly 1 Sandan, but that this is most likely. 4⃣In fact, some trends extend with a 4th N wave, or with multiple Sandans. 🫴 But, if you see an N wave starting a new trend, it's likely to expect at least one more directional wave to form a Sandan with three overlapping N waves. (Because by the time the first N wave forms, there are already two directional waves - because of the overlap). 👀So this wave count is a hint where the trend can reverse. When you see a completed Sandan you LOOK FOR a reversal (but don't expect it necessarily). 🚀 But, if you see that a healthy trend as per the five lines indicator is starting to form a 4th N wave, then there is a good chance another Sandan appears on top of the first, so one more directional wave should come.
10/14View on X
10 / 13 Here is a practical example of how to use the Wave Theory in a combination with the Time Theory. On the 9th of July 2024, at 53K, I posted a scenario which I subsequently posted that becomes my primary scenario, that $BTC should have one dead cat bounce on the weekly chart setting a lower high and eventually dump setting a lower low between the 5th and 26th of August: https://x.com/DoctorCatX/status/1810635182069653859 N.B. Actually the forecast should have been for the 5th to 25th of August as I mistyped the deadline by one day but it doesn't matter as it played out perfectly. 🫴The price pumped from 53K to 70K, set a lower high and dumped below the previous weekly low to 49K exactly on the 5th of August. 🎯 This was a perfectly accurate forecast made almost one month in advance. 📚So here is the explanation behind it: 1⃣📈First, we see that the market formed one Bullish Sandan. It didn't reverse, but broke the kumo and formed a second Sandan. So, it was a time to look for a reversal in March anyway. ⚠️🐻 After this, the market formed a bearish N wave. So we have already two hints for an upcoming reversal and lower low. 📉📉📉After a completed Sandan/Uptrend, the market forms a bearish N wave. So a bearish Sandan may come and we expect at least one more directional bearish wave to complete three overlapping N waves. This was the hint that the bottom was not in and a lower high was coming. As you see, it played out perfectly:
11/14View on X
11 / 13 ❓How about the timing aspect of this forecast? 🫴 Well here we use the time cycles and see that the market has been manifesting 16 and 15 cycles for the last two weekly cycles. Which is a Kihon Suchi 17 or Taito Suchi 15-16. So, it makes sense the next low to be on week 15-19 (17 +-2). And exactly, it happened on Monday of week #15 which was the 5th of August 2024. Now you see how powerful is Ichimoku when you combine the different elements of the system.
12/14View on X
12 / 13 This Thread covered Ichimoku's Wave Theory. If you found it useful feel free to share it so the knowledge can reach more people.
13/14View on X
9 / 9 Previous lessons 1. The Ichimoku TA system https://x.com/DoctorCatX/status/1807703250189099208 2. Tenkan Sen https://x.com/DoctorCatX/status/1810173264020328553 3. Kijun Sen https://x.com/DoctorCatX/status/1813659904688685089 4. Real and fake TK crosses https://x.com/DoctorCatX/status/1815295282793390287 5. SSA https://x.com/DoctorCatX/status/1817833046088843737 6. SSB https://x.com/DoctorCatX/status/1822907741918175638 7. Kumo https://x.com/DoctorCatX/status/1827755204713865373 8. Chiko Span https://x.com/DoctorCatX/status/1830540632428827015 9. Sanyaku Signals https://x.com/DoctorCatX/status/1834528626513006837 10. Forecast lines https://x.com/DoctorCatX/status/1938597387024343199 11. Trend and range https://x.com/DoctorCatX/status/1945938009322336349 12. Key levels for visit and reversal https://x.com/DoctorCatX/status/1946341925679743281 13. Bull and bear traps https://x.com/DoctorCatX/status/1946533654651666694 14. Time Theory https://x.com/DoctorCatX/status/1951664247093473794
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Wave Theory

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Wave Theory

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