Hi. Just finished the school but am still a little confused about harmonic patterns. I want to know 2 things.
First in pattern like The Crab the retrace of the first leg is given 0.382 or 0.618. Are these just the 2 values to look for or a range where price should be within it.
Second the points XD and CD of any pattern never actually meet at a single point. There is always a gap or a range. Don’t understand which one to follow for the potential reversal point.
Thanks.
Move on from harmonics and don’t look back would be my advice. Learning about support & resistance, key levels where participants entered the market, price action and getting a general understanding of the key fundamental / hot button issues that are affecting the market currently will serve you far better.
thx tektolnes i am using S/R and price action as the primary indicators to my trading but they are not enough in itself. To add more confluence or higher probability of a successful trade i want to incorporate harmonics as i have seen they work pretty well in range bound markets.
It looks like you, at one time, tried harmonic patterns and they never really worked like you had hoped. Although, having to use three Fibonacci tools at once may seem clumsy at first, but one will realise subsequently (after one gets accustomed to it) that they (harmonic patterns) are beautiful patterns.
. First in pattern like The Crab the retrace of the first leg is given 0.382 or 0.618. Are these just the 2 values to look for or a range where price should be within
That is a range. The parameters are what differentiate a gartley from a butterfly since the nomenclatures are distinctly based on what Fibonacci levels the swings were formed. On another note though, I care less about the names as long as the Fibonacci levels converge (or have close proximities) at a level to form cluster (or PRZ).
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Second the points XD and CD of any pattern never actually meet at a single point. There is always a gap or a range. Don’t understand which one to follow for the potential reversal point.
I am not sure I understand what you meant. Did you mean to say you draw your Fib from point X to D rather than from X to A?
I tried them a good few years back and they just weren’t for me. They looked pretty and all up on the screen but I dumped them and just looked for key levels of interest around which players would be likely to enter the market, kept an eye on the main events going on and then traded what I saw. I found it a more flexible approach which worked better for me. But if you’re profitable using harmonic patterns then keep on at it I guess as that’s the only aim in this business at the end of the day.
Sure :D! Thats the whole point of trading. Since traders are unique in every regard, we naturally won’t approach the market the same way. I always keep that in mind. It took some time and a lot of research to get hold of it. Its been over a year now, and I still calculate my PRZ myself.
I see people use charting softwares to mark out harmonic patterns; I have never used it so my opinion shouldn’t be taken as exact, but I think it would be a lot better (and fun) to spend time on deciphering how these patterns work.
When I am not trading any of the established harmonic patterns, I would be trading Fibonacci retracement- expansion cluster. Though I know a lot of chart patterns, Fibonacci tools (and harmonic patterns) always come in handy.
Good advice harmonics are very confused and very difficult method for trading. Simple price action is far less easy than harmonics trading, so you should learn that instead of harmonics.
I would agree with forexcrisp. For a beginner it is generallly better to progress from the basics to the more complex.
thx for the reply man. i have seen harmonic patterns work best esp. if they fall at a key horizontal S/R level and with a price action to confirm this. They add more confluence to trading and a high probability of success trade though they don’t work all the time but even price action sometimes give signals which does not make sense.
thx for telling that 0.382-0.618 is a range. School says BC should be retrace of 0.382 or 0.882 of AB. If BC is 0.382 retrace of AB, then CD should be 2.24 extension of BC. But if BC is 0.882 retrace of AB, then CD should be 3.618 extension of BC. and D point can also be 1.618 extension of XA.
what i meant by my 2nd question was if you take extension of XA to point D or extension of BC to D they never meet a single point and give a range so which point to consider as your entry point?
At times, the Fibonacci levels will converge at a price level – this is best. It definitely won’t always be this way though so in other times I look for clusters that have close proximities. Often, my PRZ is about 40 pips wide. Anything above that makes me uncomfortable so i ignore those setups.
Even with a PRZ of 40 pips, one needs to narrow down where precisely price would turn so I would go down to 1hr (all my setups come from 4hr), check for a sub-pattern and go long or short after a bounce.