As you may have guessed, profiting off Harmonic Price Patterns is all about being able to spot those "perfect" patterns and buying or selling on their completion. There are three basic steps in spotting Harmonic Price Patterns: • Step 1: Locate a potential Harmonic Price Pattern • Step 2: Measure the potential Harmonic Price Pattern • Step 3: Buy or sell on the completion of the Harmonic Price Pattern Step 1: Locate a potential Harmonic Price Pattern: look at the chart. At this point in time, we're not exactly sure what kind of pattern that is. It LOOKS like a three-drive, but it could be a Bat or a Crab. Heck, it could even be a Moose! In any case, let's label those reversal points. Step 2: Measure the potential Harmonic Price Pattern: Using the Fibonacci tool, a pen, and a piece of paper, let us list down our observations. 1. Move BC is .618 retracement of move AB. 2. Move CD is 1.272 extension of move BC. 3. The length of AB is roughly equal to the length of CD. This pattern qualifies for a bullish ABCD pattern, which is a strong buy signal Step 3: Buy or sell on the completion of the Harmonic Price Pattern: Once the pattern is complete, all you have to do is respond appropriately with a buy or sell order. In this case, you should buy at point D, which is the 1.272 Fibonacci extension of move CB, and put your stop loss a couple of pips below your entry price.
Chart Analysis
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