What are Harmonic Patterns?

📈 Harmonic Price Patterns 

Harmonic patterns are formations based on geometry and mathematical fractals. The core concept behind harmonic trading is the primary ratio and its derivatives (1.618, 0.618, etc.). Harmonic patterns serve as strong indicators of potential trend reversals and can be either bullish or bearish.

 

Which are the Basic Harmonic Patterns?

There are six basic harmonic patterns. These formations tend to be more reliable when trading on M30 and higher timeframes. The general win/loss ratio for harmonic trading strategies exceeds 70%.

  1. ABCD Pattern
  2. Three-Drive Pattern
  3. Gartley 222 Pattern
  4. Harmonic Bat Pattern
  5. Harmonic Crab Pattern
  6. Harmonic Butterfly Pattern

This is a combination of Harmonic Butterfly Patterns..

 

Key Issues for Trading with Harmonic Patterns

Here are some key points to consider when trading with harmonic patterns:

  • Traders should open Long or Short positions when a harmonic pattern is near completion.
  • It is more reliable to identify harmonic patterns on longer timeframes (above M30).
  • Harmonic patterns on higher timeframes should not conflict with each other.
  • In general, the Risk/Reward ratio should be above 1:3.
  • Each harmonic pattern behaves differently depending on market movement.

🔗 More: » Learn Everything about Harmonic Patterns (with charts and examples) at TradingCenter.org

 

 

Key Questions When Trading with Harmonic Patterns

  • Does the price action indicate a potential pattern?

  • What is the pattern?

  • Is it a basic ABCD pattern or another harmonic pattern?

  • Are there any other harmonic patterns in different timeframes that confirm or cancel this pattern?

  • Do time cycles confirm the pattern’s existence? (Time symmetry)

  • At what point will this pattern complete?

  • At what price will the pattern become invalid? (Near this price, place your Stop-Loss order)

  • What is the optimal price for taking profits? (Take-Profit order)

  • What is the Risk/Reward ratio of the trade? (Risk/Reward should be above 1:2, preferably 1:3)

  • How much capital should I risk in this trade? (Choosing capital leverage)

 

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🔗 Read More: » What is Stochastic Oscillator | » What is Williams %R | » What is Pivot Point | » What is RSI | » What is MACD  | » What are Round Numbers?

 

■ What are Harmonic Patterns

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