Filtered Wave automatically draws lines between the top and bottom of a price movement that is at least 10%. This percentage can be changed in IQ Chart by clicking "Utilities" >> "Parameters" and selecting "Filtered Wave" in the resulting pop-up window.

The Filtered Wave does not have any predictive value in it of itself. However, it is useful in studying the degree of retracements during major price movements and can be used alongside other types of indicators (such as Elliot Wave analysis or Fibonacci Retracements).

The Filtered Wave can also be used as a way of ignoring the "market noise" generated by the daily flucuations of stocks, only showing the major movements of a stock.

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