Harmonic trading patterns are often used by some top traders to identify potential trading setups, with an average win rate of up to 78.7%. Due to the difficulty of learning harmonics, ordinary traders find it hard to get started. Today, I will conduct a numerical teaching session on harmonic patterns. 👇👇👇



1️⃣ABCD Pattern

The ABCD (or AB = CD) pattern is undoubtedly one of the simplest patterns, consisting of three legs and four points.


First is the driving wave (AB), then the corrective wave (BC), followed by another driving wave (DC), which moves in the same direction as the AB wave. Using the Fibonacci retracement tool on the AB segment, the BC segment should precisely reach 0.618. The length of the CD line should be the same as the AB line, and the time taken for the price to move from Point A to Point B should equal the time taken from Point C to Point D.


Traders can choose to place orders close to Point C (defined as the potential reversal zone); or they can wait until the entire pattern is completed to establish long or short positions from Point D.


2️⃣Bat Pattern

The Bat pattern is named because the final shape resembles a bat. The Bat pattern was identified by Scott Carney in 2001 and consists of precise elements capable of identifying potential reversal zones (PRZ).


The Bat pattern has one more leg than the ABCD pattern and also has an additional point, which we call Point X. The first segment (XA) will lead to the BC retracement leg. If the retracement level to Point B stops at the 50% level of the initial XA swing, then what you might see is a Bat pattern.


The CD extension must be at least 1.618 of the BC segment and may reach as high as 2.618. The extension of CD must not be lower than the extension of BC; otherwise, the data becomes invalid. The endpoint (Point D) creates the potential reversal zone (PRZ), meaning traders can open positions to trade on price bullish reversals or bearish reversals.


3️⃣Butterfly Pattern

The Butterfly pattern was discovered by Bryce Gilmore, who used different combinations of Fibonacci ratios to identify potential retracement levels.


The Butterfly pattern is a reversal pattern consisting of 4 legs, marked as XA, AB, BC, and CD. The most important ratio to define is the 0.786 retracement of the XA leg. This helps to draw Point B, thereby assisting traders in identifying potential reversal zones (PRZ).


4️⃣Crab Pattern

The Crab pattern was also discovered by Scott Carney, and it follows the XA, AB, BC, and CD pattern, allowing traders to enter the market at extreme highs or lows.


The most important characteristic of the Crab pattern is the 1.618 extension of the XA leg, which determines the potential reversal zone. In a bullish Crab pattern, the first segment is formed when the price rapidly rises from Point X to Point A. The AB segment retraces between 38.2% and 61.8% of XA. Following that is the extreme point projection of the BC segment (2.618-3.14-3.618), which can identify the valid zone for completing this pattern and the possible reversal of the current trend.


The bearish Crab pattern will track the price falling from Point X to Point A, then gently rising, followed by a slight decline, and finally rapidly rising to Point D.


5️⃣Deep Sea Crab Pattern

This differs slightly from the Crab pattern outlined above. The only difference is that the retracement level at Point B must be 0.886 of the XA leg, not exceeding Point X.


The BC segment projection can range from 2.24 to 3.618.


6️⃣Gartley Pattern

The Gartley pattern created by HM Gartley has two main rules:

Point B retracement must be 0.618 of XA

Point D retracement must be 0.786 of the XA swing


The similarity between the Gartley pattern and the Bat pattern is that the XA segment leads to the BC retracement, with the only difference being that the B point retracement must be exactly 0.618 of XA. Stop-loss points are often located at Point X, while take-profit points are often set at Point C.


7️⃣Shark Pattern

The Shark pattern was also discovered by Scott Carney and has some similarities to the Crab pattern. The Shark pattern is a reversal pattern consisting of five legs, marked as Point O, Point X, Point A, Point B, and Point X.


The Shark pattern must meet the following three Fibonacci rules:

The AB segment should show a retracement level of 1.13 to 1.618 of the XA segment.

The BC segment will be 113% of the OX segment.

The target for the CD segment is 50% of the Fibonacci retracement level of the BC segment.


All trading of Shark patterns is based on Point C, while Point D serves as a predetermined take profit point.


8️⃣Three Drives Pattern.

The Three Drives setup or pattern rarely appears because it requires symmetry in price and time. This pattern consists of a series of drives and retracement lines. There are a total of 5 points that make up the Three Drives formation. The three points (1, 2, 3) represent the ends of the three drivers that move with the trend. The two points (A, C) mark the endpoints of the two retracements that occur between the drivers. The idea behind the Three Drives setup is that when the third driver (moving with the current trend) ends, the price will reverse in the opposite direction. Of course, this pattern can be bullish or bearish. The example below outlines the parameters for a bullish setup. The bearish setup is simply the reverse of these conditions.


🟨Bullish Three Drives Pattern:

Always remember that the symmetry of price and time is crucial for the formation of this pattern.

Drives 2 and 3 should be specific extensions of A and C retracements. Extensions should be 127.2% or 161.8%.


A and C retracements are typically 61.8% or 78.6% of the previous swings. Possible exceptions occur in strongly trending markets. If the market trend is strong, these retracements may only be 38.2% or 50%.


The time (horizontal distance) of the A and C retracements should be as close to symmetry as possible. The same applies to extensions (the second and third drivers are at the bottom).


It is important to remember that this particular pattern is rare. This means traders should not try to impose patterns onto the chart. If the formation contains price gaps or is not symmetrical enough (it can vary slightly), it is best to abandon the formation and move on.


🟨Three Tips on Trading Harmonic Patterns

1. Find Potential Patterns The first step to succeeding in this field is to look for suitable potential harmonic patterns. Even if you may not be sure what type of pattern it is at this time, you should continue to mark reversal points. Once you have marked the reversal points, it becomes easier to identify what type of pattern it is.


2. Measure the Potential of the Pattern You can assess the success of a pattern early in the process. To do this, you need to measure the potential of the harmonic pattern. Use the Fibonacci tool and list your observations. If the pattern has a bullish setup, there is a strong buy signal.


3. Buy or Sell Upon Completion of the Pattern To successfully complete a trade, you should buy or sell the pattern upon its completion. Remember that patience will help you avoid any catastrophic moves. Keep in mind that to be successful, especially in harmonic pattern trading, requires more patience.


Harmonic trading patterns completely follow the principle of 'buy low, sell high,' so whether buying or selling, the price is very ideal, achieving at least a two-to-one risk-reward ratio with relatively low risk, and is widely found in various markets and time frames.


🟨Common Questions:

How to Identify and Draw Harmonic Patterns?

The way to identify and draw harmonic patterns depends on the type of market direction (bearish or bullish). Therefore, while there are many different harmonic patterns, they can generally be classified into two categories: bearish patterns and bullish patterns.


Comparison of Bearish and Bullish Harmonic Patterns: What's the Difference?

Bullish traders believe the market is about to experience price increases, while bearish traders believe the market is on a downward trajectory. The same rules apply when understanding bearish and bullish harmonic patterns.


If a series of harmonic patterns suggest the market is rising, bullish traders can leverage this view to establish long positions in the selected market to profit from the upward trend.


If traders detect a bearish harmonic pattern, they may want to start shorting the market based on the assumption that prices will drop.


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