Harmonic Pattern Success Rate

Harmonic patterns can indicator potential price movements and key reversal or turning points. This can give you a major advantage because these patterns can give you very accurate entry, stop loss and target levels. If the potential profit Gartley Harmonic Pattern Trading Strategy is only marginally larger than the risk, you may wish to pass the trade on, but, if the reward is much higher than the risk, then the trade could be taken. All these elements come together to create a complete harmonic trading strategy.

Harmonic Butterfly Pattern

The Fibonacci Extensions tool supports this by automating and simplifying the calculation of the Fibonacci ratios used in the construction of the pattern’s final leg. B-C– For a true Gartley Pattern to form, the B-C leg of the pattern needs to end at the 38.2% or the 88.6% retracement of the A-B leg. You can use the Fibonacci Retracement tool to easily calculate these levels in a matter of seconds.

Gartley Harmonic Pattern Trading Strategy

For this reason, we would prepare to buy the NZD/USD pair when CD finishes at the 161.8% of BC and the price action bounces upwards. When this happens, we want to go long putting a stop loss below point D as shown on the image. But what is the potential, once the Forex Gartley Pattern has been confirmed?

Gartley Bullish Trading Example

In this example, a take profit order would be hit at 73.55, bringing us 140 pips. Again, depending on where your stop loss is and general risk tolerance, you can choose from 38.2% to 78.6% Fibonacci How To Read Trading Charts retracement of the CD leg. More aggressive traders with a higher risk tolerance advise to place the stop loss above the point X. In this case, that would translate to a stop loss of 80 pips.

Gartley Pattern Explained

For example, in Gartley bullish pattern, the target zones are computed using the XA leg from the trade action point . The projections are computed using Fibonacci ratios like 62% or 78.6% of the XA leg and added to the action point . The extension ratios like 1., 1.27, 1.62, 2., 2.27 or 2.62 are computed for potential target levels.

Gartley Harmonic Pattern Trading Strategy

My goal is to get as many pips as possible and help you understand how to use indicators and price action together successfully in your own trading. Harmonic patterns are a precise way to trade and they can be helpful for traders who enjoy studying price charts and trading patterns. It is important to remember that harmonic patterns are not always successful. The price may not reverse Technical Analysis Simplified at potential reversal zones or, if it does reverse, the price may not move as far as expected before turning back the other way. Harmonics patterns frequently occur in the forex market because the market trades 24-hours per day. This means that patterns can extend across lower timeframes, such as one-minute, five-minute, 15-minute, or hourly charts from one day to the next.

Shark Pattern

Make sure the above rules are satisfied before you trade the Gartley harmonic pattern. This pattern is valid when the price respects and bounces off of the XA swing high swing low to form point B at the 61.8% Fibonacci retracement level. The target of point D is, in fact, using the same XA swing Hammer Candlesticks high swing low and is aiming for the 78.6% Fibonacci retracement level of XA. We want to close the second part of our trade once we hit the 0.618 Fibonacci retracement of the CD leg. Although that can be your next target once you become more experienced with the harmonic pattern indicator.

  • As a general rule, I would recommend that you choose a time frame between 15 minutes-per-candle and 1 day-per-candle when trading the Gartley Patterns.
  • For more information about Suri or to follow his work, visit SuriNotes.com or click here.
  • The bullish Butterfly pattern has the same ratios, but the pattern starts with an up XA wave up.
  • If you only open one position then the recommended target is at point A.
  • Therefore, you may lose money by ignoring the price context.
  • You can use the Fibonacci Retracement tool to easily calculate these levels in a matter of seconds.
  • For example, in Gartley Bullish pattern, the XA, AB and BC legs are completed and it starts to form the CD leg, you would identify a potential trade may be in the works.

Commodity and historical index data provided by Pinnacle Data Corporation. Unless otherwise indicated, all data is delayed by 15 minutes. The information provided by StockCharts.com, Inc. is not investment advice. The following chart shows AAPL Bullish Crab pattern progression and Gartley Harmonic Pattern Trading Strategy completion of targets. The graphic below illustrates how Fibonacci ratios are used to apply retracement, extension, projection and expansion swings. Most trading software packages have Fibonacci drawing tools which can show Fibonacci retracements, extensions and projections.

The Amazing Harmonic Pattern Trading Strategy Rules

The Fibonacci ratio is common in nature and has become a popular area of focus among technical analysts that use tools like Fibonacci retracements, extensions, fans, clusters, and time zones. Fibonacci extensions are a method of technical analysis used to predict areas of support or resistance using Fibonacci ratios as percentages. This indicator is commonly 4 Steps To Using The Inside Bar For Trading used to aid in placing profit targets. Harmonic price patterns are precise, requiring the pattern to show movements of a particular magnitude in order for the unfolding of the pattern to provide an accurate reversal point. Harmonic price patterns take geometric price patterns to the next level by using Fibonacci numbers to define precise turning points.

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This is where the majority of Gartleys, that are in the making, fail. We will now demonstrate how to spot and draw Gartley patterns on the TradingView platform. XD – Moreover, the point D should be 78.6% retracement of the initial XA leg. CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations.

Gartley Harmonic Pattern Trading Strategy

First, click on the harmonic pattern indicator which can be located on the right-hand side toolbar of the TradingView platform. The Gartley chart pattern is only giving us a possible entry point without telling much about where to place our protective stop loss and where to take the profits. Now, we can keep things simple and use the Gartley price structure to our advantage.

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