It is based on Wyckoff theory (Richard D Wyckoff), and David Weiss (David H Weiss) took this analysis to the next level by developing the wave chart.
The 'Weiss Wave' is available as a paid for 'add in' for some charting software.
I made that chart using MS Excel & data from eSignal, which can be plugged straight into Excel. It is not exactly the same as the Weiss Wave plug in but similar. It firstly accumulates volume per bar to a predetermined amount, then draws the wave to the size required and show's the volume per wave at each pivot. So on that chart, there is ~400,000 shares per bar, and the wave is 0.005 (half a cent), so the price has to 'close' half a cent higher or lower to pivot, and volume is shown in 100,000's. It is generated from 45min closing data. The bar size, wave size, and volume numbers can all be adjusted to whatever you choose.
If you search for David H Weis &/or Richard D Wyckoff there is quite a bit of free info around on the web.
Probably the best and quickest explanation on how the wave chart works can be found on a You Tube video, where David Weiss does a thorough explanation of the chart, then does a Q & A session after for BigMike Trading. There is about an hour of explanation, and a half hour of Q & A.
https://www.youtube.com/watch?v=uzISUr1itWg
cheers
AUQ Price at posting:
6.9¢ Sentiment: Hold Disclosure: Held
