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Harmonic patterns serve as valuable tools for identifying new trading prospects and price trends, yet their effective utilization demands understanding of their characteristics. The top harmonic patterns and their appropriate application. These patterns will help you grow in the field of forex.
What is the Best Harmonic Pattern to use in trading Forex?
These patterns can help you become an expert in forex and you’ll be able to grow rich in just a short time and you can ace the amazing field. These patterns manifest geometrically by using Fibonacci numbers to signal possible price shifts or trend reversals.
Traders leverage these patterns to inform What are the best books to learn harmonic patterns their trading decisions.
Harmonic patterns are specific chart patterns integral to trading strategies, aiding traders in predicting potential market movements and identifying pricing trends.
However, it’s crucial to note that before relying on any pattern, a trader should possess confidence in performing their technical analysis, enabling them to make swift and well-informed trading choices.
Top 7 Harmonic Pattern Finder V5 Indicator MT4
1. ABCD Pattern
The ABCD pattern, also known as AB=CD, is a foundational structure formed by specific price movements. Comprising three distinct segments and four pivotal points, it starts with an impulse movement (AB), followed by a corrective movement (BC), and concludes Auto Harmonic Pattern with another impulse movement (CD) mirroring AB’s direction.
Traders employ Fibonacci retracement on the AB leg, expecting precise levels at the BC leg for potential entry or exit points.
The ABCD Pattern is a fundamental harmonic pattern formed by three price movements and four distinct points. It begins with an impulsive movement (AB), followed by a corrective movement (BC), and concludes with another impulsive movement (CD) mirroring the direction of AB. Traders use Fibonacci retracement to analyze these patterns, facilitating precise entry and exit points.
2. BAT Pattern
The BAT pattern, identified by Scott Carney, presents a bat-shaped formation with unique characteristics.
The CD extension is critical, ranging between 1.618 and 2.618 of the BC leg, offering a well-defined Potential Reversal Zone (PRZ) for traders. Its structure incorporates one more leg compared to the ABCD pattern, introducing an additional Smart Money Concept point labeled X.
Named for its bat-like appearance, the BAT Pattern involves an extra leg and an additional point labeled X.
The pattern emerges as the XA leg leads to a BC retracement, typically stopping at the 50% retracement level. Traders analyze the retracement of the BC leg, aiming for a 50% retracement at point B to confirm a potential BAT Pattern. The CD extension aligns with specific Fibonacci ratios, creating a Potential Reversal Zone (PRZ) where traders consider initiating bullish or bearish positions.
3. Gartley Pattern
The Gartley pattern, attributed to HM Gartley, follows specific rules governing its formation. The retracement of point B should ideally reach 0.618 of the XA movement, while point D retracement should be precisely 0.786 of XA.
Similar to the BAT pattern, it initiates with the XA leg, leading to a BC retracement, yet with stringent retracement criteria at point B. Traders often position stop-loss at point X and set take-profit at point C.
The Gartley Pattern relies on two key rules: a retracement Super ADX Indicator of 0.618 for point B concerning XA and a retracement of 0.786 for point D concerning XA. Similar to the BAT Pattern, the Gartley Pattern involves an XA leg leading to a BC retracement, with stop-loss typically set at point X and take-profit at point C.
4. Butterfly Pattern
A Butterfly pattern, discovered by Bryce Gilmore, is characterized by a four-legged structure labeled X-A, A-B, B-C, and C-D. Its defining ratio involves the 0.786 retracement of the XA leg, assisting traders in identifying the Potential Reversal Zone (PRZ) for potential trend reversals.
The Butterfly Pattern, discovered by Bryce Gilmore, is a four-legged reversal pattern. A crucial ratio is the 0.786 retracement of the XA leg, aiding in plotting point B and identifying the Potential Reversal Zone. Traders use this pattern Strategies PDF to anticipate trend reversals and make informed trading decisions.
5. Crab Pattern Harmonic Trading Strategies and Patterns
The Crab pattern, follows an X-A, A-B, B-C, and C-D sequence. Particularly valuable for identifying extreme highs or lows, its notable feature is the 1.618 extension of the XA movement, crucial in determining the PRZ for market entry or exit points.
Attributed to Scott Carney, the Show Pips Indicator Crab Pattern follows an X-A, A-B, B-C, and C-D sequence, allowing traders to enter the market at extreme highs or lows.
The 1.618 extension of the XA movement defines the PRZ, indicating potential trend reversal. The bullish version of the Crab involves a sharp rise from point X to A, followed by a retracement at AB.
6. Deep Crab Pattern
The Deep Crab pattern necessitates a 0.886 retracement of the XA movement at point B, with a wider range in BC projection, spanning from 2.24 to 3.618. A variation of the Crab Pattern, the Deep Crab Pattern differs in the retracement of point B, which must be 0.886 of the XA movement without exceeding point X.
The BC projection can range from 2.24 to 3.618, offering traders a unique perspective on potential market reversals.
7. Shark Pattern
Similar to other harmonic patterns, the Shark pattern involves distinct Fibonacci rules. The AB leg should retrace between 1.13 and 1.618 of the XA leg, while the BC leg comprises specific ratios. Trades are executed based on point C, with point D serving as a predefined profit target.
Also discovered by Scott Carney, the Shark Pattern is a five-leg reversal pattern with specific Fibonacci rules. The AB leg should show a retracement between 1.13 and 1.618 of the XA leg, while the BC leg is 113% of the OX leg. The CD leg targets 50% of the Fibonacci retracement of the BC leg. Trades based on the Shark Pattern are taken from point C, with point D serving as a predefined profit target.
