Continued. 3 Steps to Trading Harmonic Price Patterns.

Let’s continue on our 3 steps to trading harmonic price patterns.

Step 2: Measure the potential Harmonic Price Pattern

Using the Fibonacci tool, a pen, and a piece of paper, let’s 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.

Is it that easy?

Not exactly.

The problem with harmonic price patterns is that they are so perfect that they are so difficult to spot, kind of like a diamond in the rough.

More than knowing the steps, you need to have hawk-like eyes to spot potential harmonic price patterns and a lot of patience to avoid jumping the gun and entering before it completes the pattern.

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