Harmonic patterns form geometric price patterns with angles based on Fibonacci numbers, which can define precise turning points in price.
To put it briefly, harmonic patterns attempt to predict future movements in price action.
Utilising harmonic patterns can provide you with both entry and take profit levels, as well as trend reversals.
Drawing such patterns requires a keen eye for confluence, symmetry, and time.
You shouldn't look to trade off harmonic patterns alone, so always incorporate reliable confluence such as; horizontal levels, Fibonacci, and even areas of volume and liquidity.
Harmonic patterns form geometric price patterns with angles based on Fibonacci numbers, which can define precise turning points in price.
To put it briefly, harmonic patterns attempt to predict future movements in price action.
Utilising harmonic patterns can provide you with both entry and take profit levels, as well as trend reversals.
Drawing such patterns requires a keen eye for confluence, symmetry, and time.
You shouldn't look to trade off harmonic patterns alone, so always incorporate reliable confluence such as; horizontal levels, Fibonacci, and even areas of volume and liquidity.
This first part will cover a range of patterns and cheat sheets have been created for each one.
Before you go wild trying to trade these patterns, practice drawing them on charts and always refer to the cheat sheets.
Key Points of the Lesson
UTILITY
Harmonic patterns are powerful Fibonacci constructs.
Formed by a combination of Fibonacci Retracement, Expansion, Extension and Time.
They provide bullish and bearish entries and targets.
IMPLEMENTATION
Internal (consolidation) pattern:
Bat
Gartley
External pattern:
ABCD
Butterfly
All patterns are best used on 4h/4h+.
BAT
Internal pattern.
Check cheat sheets.
GARTLEY
Internal pattern.
Check cheat sheets.
ABCD
External pattern.
Check cheat sheets.
BUTTERFLY
External pattern.
Check cheat sheets.
CRAB
External pattern.
Check cheat sheets.
TIPS & TRICKS
B is the difference between the Bat and the Gartley pattern.
Best entry for the butterfly pattern ⇒ AB = CD in Fibonacci time ⇒ D at 1.272 extension of AB from B (double click).
The symmetry between each wave and time is important ⇒ the correct look
Volume profile of Internal Harmonic patterns is that of a consolidation pattern.
Trade from point D of the Harmonic pattern. Experienced traders can trade an Harmonic from point C.
Never trade a Harmonic pattern alone ⇒ always look for confluence.
Use market structure for stop losses and targets.
TAKE HOME MESSAGE
Powerful Fibonacci constructs
Symmetry and time are important
Best used on higher timeframes with other confluence.