New models describing wave propagation in transversely modulated optically induced waveguide arrays are proposed. In the weakly guided regime, a discrete nonlinear Schrodinger equation with the addition of bulk diffraction term and an external ``optical trap'' is derived. In the defocusing regime the optical trap induces a stable localized mode. In the limit of strong transverse guidance, the dynamics is governed by a model which represents the optical analogue of wave action.