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There is a rapid increase in the use of the harmonic pattern among the traders. Now the question arises what are the harmonic patterns? The Harmonic patterns are the geographical pattern that predicts the increase of price in the financial market. The harmonic pattern is even applied in the shares market as they are also part of the financial market. These patterns have a high success rate which even crosses over 90%.

Steps to locate the trading marketing strategy

There are mainly three steps to determine trading price pattern

  1. locating the perfect potential harmonic price pattern- It looks like the three points are connected.
  2. Measuring the potential harmonic pattern- It is usually being measured by the Fibonacci tool.
  3. Selling or buying the harmonic pattern- when you have completed the pattern according to your trade decision. You should contact the buyer or the seller.

Rules for using harmonic patterns

If you are using the traditional styles by making the square, triangles, or the circle it should be valid to be trusted or being implemented successfully to get the benefit. As we know the harmonic patterns are based on the Fibonacci retracements and extensions. So the knowledge and the uses of these tools must have been studied by the traders.

Best harmonic patterns

Some of the best harmonic patterns used in the trading market are:
Bat harmonic pattern- It is just the same as the Gartley pattern. It is developed by Scott Carney in 1931. It helps in making a profit.
The Gartley patterns – it was being introduced by H.M.Gartley in his book named ‘Profits in the Stock Market’. The pattern suggests that the trade market should be ending and an upward move.
The trader should know and do studies about how to use these patterns in the trading market. Proper study is a must before implementing the pattern.
The butterfly harmonic pattern- It is a harmonic reversal pattern. It is being used by the Fibonacci ratios. Among all the harmonic patterns butterfly harmonic pattern is the most prominent and easy to deal with.

It helps the traders to know about where they are, who they are, and how to implement it. It is the chart reversal pattern in the category of Harmonic pattern. It shows the price at the end of the day.
The shark harmonic pattern- Some of the patterns are used and being implemented many times but this pattern is the new pattern introduced in 2011 by Scott Carney. It also has the same features as others. This pattern also follows the Fibonacci ratio.

Why do we form the Harmonic pattern?

As they are reversed in the behavior, they have to experience price fluctuation. We also know that the price is unstable so we should have to make a plan to overcome the losses. examples of such patterns are cup handles, flags, and triangles.
These patterns are catagories into various types such as bats, crab, deeper crabs, sharks, ABCD, and many more.

Advantages of Harmonic pattern

  • As the patterns predict the future projections and stop the losses in advance.
  • It is reliable, repeatable, frequent, and makes high-level portable setups.
  • These rules are used by Fibonacci ratios.
  • worked well in the financial trading market and give good results.
  • Work in all the conditions by using the advanced tools
  • CCI, MACD, RSI are some indicator theories ca be used with them.

Disadvantages of Harmonic pattern

  1. It is difficult and high-level technical skills are required which makes it complex to understand.
  2. correct coding and identification of the trading harmonical pattern is difficult.
  3. Fibonacci numbers are much difficult to understand and implement in the projection zones.
  4. Difficulty arises when the same pattern overlaps each other.
  5. Riska are also being taken by the traders and sometimes the traders have to suffer from high losses.

Conclusion

Most technical traders trade using chart analysis using the concept of market context. The concept of market context is that indicators are related to how the current price reacts to a particular level (pivot, support, and resistance, MA) and past price conditions (oversold, overbought, etc.). Explain how the pattern evolves in the current time frame, where and how the pattern evolves, or multiple time frames, etc. Each trader develops its market context for trading. One of the elegant ways to define market conditions is to use the Fibonacci grid structure. The Fibonacci grid consists of Fibonacci bands (displaying price reactions and trends), pivot levels (displaying past support/resistance areas), and market structure (displaying potential turning points). The Fibonacci grid layout is plotted on all trading charts, how the current price reacts to the Fibonacci band, whether the price is exhausted, whether the price is above or below the extreme band, and the price. Understand if is rising. The resistance level is defined by the pivot. The conversion of these levels in the Fibonacci framework structure, alongside the new example construction (and example target/stop level), assists dealers with settling on the best choices. Each example has explicit passage/stop rules and objectives, so the exchanging design is extremely precise.

Each pattern has specific entry / stop rules and goals, so the trading pattern is very accurate. In combination, harmonious pattern analysis and market conditions bring great trade benefits. Harmonic patterns can fail, but their error levels are well defined and this information is known before trading. Therefore, harmonic pattern trading has many advantages over other trading methods.
Other market conditions/confirmation conditions and indicators include divergence, multiple timeframes, Fibonacci bands, Andrews pitchfork analysis, moving averages, pivots, channels, trend lines, volumes, and volatility. It is the author’s preference to trade harmonic patterns at calculated entry levels rather than blindly trading in retracement levels or reversal zones recommended by harmonic trading experts. Most harmonic traders expect the pattern to change and try to trade these patterns in the “pivot zone” and end up trading the opposite (opposite trend). To start trading, I prefer a price reversal confirmation combined with a reversal trend reversal in the “reversal zone”.Use it after having the full knowledge.