Is the market difficult to trade? Your capital evaporated? Your mentality exploded? Study "Harmonious Trading" head on! ! !
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In the technical analysis of financial markets, harmonic patterns are a method of price pattern analysis based on the Fibonacci sequence. These patterns help traders predict future price movements by identifying specific points and proportional relationships in market price charts. Harmonic patterns emphasize the cyclical and symmetric nature of market prices, providing relatively accurate buy and sell signals.
This article will introduce four common harmonic patterns in detail: Butterfly, Bat, Crab and Shark (Gartley). Each pattern has its own unique structure and Fibonacci retracement and extension ratios. We will focus on analyzing the key points of each pattern (X, A, B, C, D) and the related Fibonacci ratios, especially the values of AC, XD, XB and BD. These values are the key to identifying and confirming harmonious patterns. Understanding them can help traders better grasp market dynamics and make more informed trading decisions.
Without further ado, here are the detailed Fibonacci retracement and extension values for each segment of the four harmonic patterns:
1. Butterfly Pattern
AC value: 0.618 or 0.786
XD value: 1.27 or 1.618
XB value: 0.786
BD value: 1.618
2. Bat Pattern
AC value: 0.382 or 0.50
XD value: 0.886
XB value: 0.382 or 0.50
BD value: 1.618 or 2.618
3. Crab Pattern
AC value: 0.382 or 0.886
XD value: 1.618 or 2.618
XB value: 0.382 or 0.618
BD value: 2.618 or 3.618
4. Shark Pattern
AC value: 0.382 or 0.886
XD value: 1.13 or 1.618
XB value: 0.618
BD value: 1.13 or 1.618
Is the text difficult to understand? Then just look at the picture:
⭐⭐⭐⭐⭐Five-star warning! The conditions need to be stated in advance. The real harmonious pattern trading opportunity is actually at point D. And harmonious trading is a counter-trend trading, so risk control must be done well!
What is bullish? Only after the decline to point D is completed can we see a potential reversal.
However, most of my friends are accustomed to entering the market at point C. Although this is not a big problem, the entire CD segment is actually a very long trading range. Before the reversal of point D is completed, we cannot know whether this complete structure can be completed.
So if you lose money on the trade at point C, don’t come to me and say, “Brother M, you are a scammer 🤬”, because that would make me very sad.
1. Butterfly Pattern
Butterfly Pattern
AC value: 0.618 or 0.786
XD value: 1.27 or 1.618
XB value: 0.786
BD value: 1.618
2. Bat Pattern
Bat Pattern
AC value: 0.382 or 0.50
XD value: 0.886
XB value: 0.382 or 0.50
BD value: 1.618 or 2.618
3. Shark Pattern
Shark Pattern
AC value: 0.382 or 0.886
XD value: 1.13 or 1.618
XB value: 0.618
BD value: 1.13 or 1.618
4. Crab Pattern
Crab Pattern
AC value: 0.382 or 0.886
XD value: 1.618 or 2.618
XB value: 0.382 or 0.618
BD value: 2.618 or 3.618
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Summarize:
Advantage:
Capture reversal opportunities: Harmonic trading patterns provide opportunities to enter trades when the market shows reversal signals, helping to capture potential profits from price reversals.
Strict pattern rules: Each harmonic pattern has clear pattern structure and proportion requirements, allowing traders to identify and confirm these reversal signals relatively reliably.
Combined with Fibonacci Tools: Harmonic patterns are often used in conjunction with Fibonacci retracement and extension levels, which enhances the validation of the pattern and the reliability of the trading signals.
Disadvantages:
Challenges to market trends: The contrarian nature of the Harmonic Trading pattern means that it may be relatively counter-productive to the current market trend. When the market trend is strong, the reversal signal of the pattern may be suppressed by the market trend.
Subjectivity of pattern identification: There may be a certain degree of subjectivity and interpretation in the process of identifying and confirming harmonious patterns, so they need to be verified and confirmed in conjunction with other market analysis tools.
In summary, as a counter-trend trading strategy, the Harmonic Trading Pattern can provide traders with trading opportunities when the market reverses through its clear pattern structure and the support of Fibonacci tools, but it is also necessary to pay attention to its limitations in market trend and pattern identification.
Author: Manson
