From Knitting New Scarves:

Smooth wave patterns are found everywhere — in nature’s rippling water, in man-made architectural forms, and even in once-fashionable crimped hair — but a three-dimensional wave pattern knit into a scarf is undoubtedly new. The simple techniques of Rib Division (separating the knits from the purls on two different needles and working them separately) and Combine Stitches (putting those same stitches back onto one needle later) allow you to knit uneven lengths around the scarf and then lock sections into place to create the wave shapes. Once you get started, the pattern is a simple series of repeats.

Additional Yarn Information:

The yarn called for in the pattern comes in hanks or in unwashed cones. If you use the unwashed yarn, then wash without agitating, “the scarf will full and have an interesting tighter wave (it may also shrink in length slightly).”