Harmonic Pattern Introduction
Harmonic Patterns are a type of complex patterns that occur naturally in financial charts based on geometric price action and Fibonacci levels.
The patterns were introduced to the trading world by Harold McKinley Gartley in 1932. Gartley created a pattern which he named after himself and outlined in his 1935 book, Profits in the Stock Market.
When properly identified, harmonic patterns allow traders to enter the trade in a high probability reversal zone with minimal risk. Harmonic trading techniques utilize Fibonacci price patterns and numbers to quantify these relationships.
What is Harmonic Patterns?
Its a trend reversal patterns that are based on the Fibonacci extensions, retracement levels, and geometric structures.
These patterns provide traders/investors the potential reversal zone, which help to hop in reversal trades at the brink of exhaustion.
Pattern Example:
However, each type of harmonic pattern has a different geometrical shape and Fibonacci ratio. These points named as X, A, B, C and D. Each harmonic patterns follows its own set of rules.
Purpose
The main purpose of harmonic patterns is to predict price movements.
Harmonic patterns are the key to identifying reversals. They are a very precise instrument, characterizing very specific price movements.
Type of Harmonic Pattern:
👉Butterfly Pattern
👉Gartley Pattern
👉Bat Pattern
👉Crab Pattern
👉Cypher Pattern
👉Shark Pattern
In Next post we will see about in details, stay tuned.