Let’s examine harmonic price patterns in the forex market.
Now that you’ve got the classic chart patterns down, it’s time to move on and add some more advanced tools to your forex trading arsenal.
In this lesson, we’ll be looking at harmonic price patterns.
Unlike classic chart trading patterns, a harmonic pattern must meet specific movement requirements to be considered valid. These requirements reduce the subjectivity of trading harmonic chart patterns versus trading classic chart patterns.
The movement requirements are based on Fibonacci retracements and Fibonacci extensions.
These bad boys may be a little harder to grasp but once you spot these setups, it can lead to some very nice profits!
The whole idea of these patterns is that they help people spot possible retracements of recent trends.
In fact, we’ll make use of other tools we’ve already covered – the Fibonacci retracement and extensions!
Combining these wonderful tools to spot these harmonic price patterns, we’ll be able to distinguish possible areas for a continuation of the overall trend.
Types of Harmonic Price Patterns
In this lesson, we’re going to discuss the following Harmonic Price Patterns:
- ABCD Pattern
- Three-Drive Pattern
- Gartley Pattern
- Crab Pattern
- Bat Pattern
- Butterfly Pattern
Phew! That’s quite a lot to cover!
But don’t you worry… Once you get the hang of things, it’ll be as easy as 1-2-3!
We’ll start off with the more basic ABCD and three-drive patterns before moving on to Gartley and the animals.
After learning about them, we’ll take a look at the tools you need in order to trade these patterns successfully in the forex market.
For all these harmonic price patterns, the point is to wait for the entire pattern to complete before taking any short or long trades.
You’ll see what we’re talking about later on so let’s get started!