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.
just looked in the harmonic trader book i have and it appears that a crab’s B leg can be between 0.382 and 0.618
not sure i understand the second question but with a crab you need atleast an AB = CD extension for it to be valid. an AB = CD 1.272 or 1.618 extension in crab patterns are much more typical than a standard AB = CD one though. so in other words measure your AB leg with the fibonnci tool, then place it on the tip of the your C and have it projection downwards. the minimum of a valid AB=CD would be at 100%
oh and remember though, the D point for the crab is at the 1.618 [B]XA[/B] extension, so you should not be looking to place a trade before this point.
look in the thread “30 pips a day keeps the your money at bay” for a video exlplaining how to draw patterns [i think a link was posted within the first 20 pages]
but please be aware the majority of patterns in that thread are not textbook gartleys/butterfly’s/crabs/bats, they are ab=cd swings on an axis [x]
it is a good thread, but you will often hear people call patterns “gartleys” for example when technically it is not a gartley because it does not meet the specific structure requirements for a gartley. If you are newbie it is important you are aware of this
thx defiance888 for clearing on the initial retrace of move XA. It now makes sense because looking for just 0.382 or 0.618 would end up catching patterns fewer to none.
what i meant by the 2nd question was the reversal point (as per babypips school) can be 1.618 extension of move XA OR it can be 2.24-3.618 extension of move BC. Now both these points would never meet at a single point and there will be a range to choose from where to enter.
school says if BC is 0.382 retrace of AB then CD should be 2.24 extension of BC. But if BC is 0.886 retrace of AB then CD should be 3.618 extension of BC.
The problem is like you said AB=CD is not valid if i follow the rules as per school.
By the way can you tell how good the harmonic patterns as per school lessons are. should i look for some other source. can you recommend any.
i think you are a little confused, the reversal point for the crab HAS to be at the 1.618 XA extension. lets say for example the BC is 2.24 - 3.618 and falls near to the 1.000 XA, lets say also an AB = CD falls on this area too, THIS IS NOT a crab as the reversal point for a crab is is 1.618 XA.
In that case it is not a crab, but as the AB = CD line up with the 1.000 XA [100% fib level] a profitable trade still might be possible as when a fib point along the XA leg converges with an AB = CD [or AB = CD extension (1.272, 1.618 …etc)] then price often reacts when it lands on this point if wing symmetry is good. good wing symettry = the angle of the move from A to B and the angle of the move from C to D is similar.
with a crab, the 1.618 XA and an AB = CD move (or extension) and a BC extension MUST ALL land relatively close to each other for it to be a crab.
[B]edit: [/B]I just checked. it appears that the AB = CD move does not have to fall massively close to the 1.618 for it to be a valid crab, but price MUST pass this AB = CD on the way to the crab or touch this level around the crab area. also a standard ab =cd is not that common in the crab, more common in crabsis an ab =cd extension
tbh, the crab is a tricky pattern. I do not see it all that often but when i see a suspected crab i first look in my book the harmonic trader volume 1 to see if the ratios i am seeing on screen are correct. the book is by scott m carney [the guy who invented the crab pattern and also a few others]
as for the babypips school on pattens, the babypips school section on these patterns are extremely brief and not in depth and lacks real world examples, therefore imo it is not a good place to learn about these patterns if you are a serious trader. I would have to reccomend the book i have if you are serious about it, it is clear, has many examples and goes into a lot of depth.
tbh, you can probably find crab explanations and other pattern explainations from google, but then again some of these explanations are probably not going to be 100% accurate. I would reccomend the book, my understanding of the patterns improved greatly from reading the book.
the full name of the book is, Harmonic Trading: Volume 1: Profiting from the Natural Order of the Financial Markets
if you are able to PM me i might be able to give you advice on getting the book at a "discount"
I do not know if this forum has any restrictions on PM’s though from new users, on some forums if a users postcount is too low he cannot use PM’s.