[Shark] and [5-0] are both members of the harmonic pattern, and are tools for predicting trend reversals. However, they are the only ones among all the patterns whose right side may exceed the left side, so they are easy to remember.

In the last issue, the [Butterfly] and [Crab], point D are both outside the 100% retracement line. The [Butterfly] is [1.272, 1.618). When point D reaches 1.618, it transforms from a [Butterfly] into a [Crab].

The D point of the crab is on the 1.618 extension line of XA, at [2.618, 3.618] of BC. The D points of the crab and butterfly are determined by the extension lines of the two segments XA and CB, which is a more complex group.

Today we continue to learn another set of forms: [Shark Form] and [5-0 Form]

1. Understanding [Shark Form]

The Shark pattern was discovered by Scott Carney in 2011. It is similar to the Bat pattern. Point C exceeds point A, and the phenomenon of "breaking the previous low" occurs, indicating a strong counter-trend. The reversal zone where point D is located is in the XC [0.886, 1.13] retracement line range. The following are the two predicted trend directions of [Shark].

X: The high or low point of a market

A: The point where the market ends at point X

B: [Shark] has a looser requirement for point B, and recommends a retracement range of 0.382~0.618 of XA

C: Beyond point A, falling between the retracement levels of [1.13, 1.618) of AB, excluding the retracement level of 1.618

D: Different from the previous determination methods of [Bat], [Butterfly] and [Crab], the D point of [Shark] is determined by XC. The D point falls between [1.13, 1.618] of XC and must also satisfy [1.618, 2.24] of BC.

Take Profit and Stop Loss

Take profit: T1=0.5CD, T2=0.886CD

Stop loss: X points, 1.41 of XA

2. Shark’s real case

Take the bullish [Shark] as an example. The following figure is the 4-hour chart of the Australian dollar against the US dollar. After experiencing a downward trend, the market began to rise and then formed a bullish [Shark] big "M" shape. In the harmonic pattern, basically the bullish pattern is a big "M", and the bearish pattern is a "W".

AUD/USD 4-hour chart

BTC 4-hour chart

Let's take a look at the bearish [shark]. The picture below is the daily chart of the Australian dollar against the US dollar. After the market has been going on for a while, a big "W" appeared, a bearish [shark pattern]. Point B is determined by XA, point C is determined by AB, and point D is determined by XC.

AUD/USD daily chart

Gold spot to US dollar 1 hour chart

3. Understanding the [5-0 Form]

It is the only six-point confirmed pattern in harmonics. The part before point D is very similar to the "Shark", which was also discovered by Scott Carney. This pattern represents the first pullback of an important trend. It has a four-segment structure, and each point has a specific Fibonacci value. The pullback of point D is between 0.5 and 0.618 of BC.

The appearance of [Shark] may lead to the appearance of [5-0], but the appearance of [5-0] is not necessarily [Shark]. It has six points, which is different from the shape we learned before. The X point of [5-0] is the second point, and the 0 point is the first point, which is the Arabic numeral 0. Let's take a look at its shape.

Two directions of [5-0]:

The meaning of each point and the method of determination:

A: It is located between the 0X price range, generally between 0.382 and 0.618

B: Fibonacci extension level of XA segment 1.13-1.618

C: Breaking through point A and point 0, the Fibonacci extension level of segment AB 1.618-2.24

D: Determined by the BC segment, falling on the 0.5 Fibonacci retracement level of the BC segment, or 0.618, and AB=CD

Reversal zone: Depends on point D combined with the 0.382~0.618 Fibonacci retracement line of segment BC

Take profit: T1=0.382CD or T1=0.618CD, T2=1CD

Stop loss: 0.618BC or 0.786BC reversal zone next Fibonacci line

4. Examples of 5-0 pattern in real trading

The picture below is a bullish [5-0] pattern, which is the daily chart of GBP/JPY. After a round of rise, the market fell, and then fell back to point B, and then pulled up to point C, forming a big "W", and then fell to the 0.5 retracement of BC, obtaining a bullish [5-0] pattern. Entering the market at point D can take advantage of the subsequent market.

GBP/JPY Daily Chart

Huatai Securities Daily Chart

US 100 CFD 1 hour

Bearish [5-0]

Alibaba Group Holding

Finally, let’s summarize what we shared today to deepen our impression and master it as soon as possible!

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The above is what I shared today. If you have gained something from this sharing, please like, forward and collect it! Follow [Paul Dahuige] to learn more trading knowledge and skills.