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In this paper, we present a spectrum sensing algorithm based on energy level at different frequency bands using wavelet transform for Cognitive Radio (CR) applications. Existence of a primary user's signal may be detected by searching for wavelet coefficients having energy higher than a threshold value corresponding to communication channel noise energy. The wavelet based algorithm is tested with Binary Phase Shift Keying (BPSK) modulated signals under two channel models introducing fading channel affect and additive white Gaussian noise with different Signal to Noise Ratios (SNRs). In order to evaluate accuracy of the algorithm, probability of detection is evaluated.