Harmonic Patterns in Fx

In finance, there are two types of patterns: Harmonic and Technical. Harmonic Patterns are geometric formations that occur in financial markets as a result of the interaction of supply and demand. These patterns can be used to predict potential reversals in the market. Technical Patterns, on the other hand, refer to the study of charts and historical price data to identify trends and possible entry and exit points. In this blog post, we will explore Harmonic Patterns in FX markets. Stay tuned for upcoming posts that will discuss Technical Patterns!
 

Harmonic Patterns in Fx

Harmonic patterns in Fx are created when the price action of security reaches certain price levels. These levels are known as Fibonacci ratios, and they are derived from the Fibonacci sequence. The most important Fibonacci ratios are 0.618, 1.000, and 1.618. Other ratios are used, but these three are the most important.

The Harmonic Patterns that we will discuss in this blog post are:

The Gartley Pattern

The Bat Pattern

The Butterfly Pattern

The Crab Pattern

The Cypher Pattern

The Shark Pattern

Each of these patterns has specific rules that must be met for it to be considered valid. We will go over each pattern in detail so that you will be able to identify them when they occur in the market.
 

The Gartley Pattern

The Gartley Pattern is a bullish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after H.M. Gartley, who first described it in his book "Profits in the Stock Market." The rules of the Gartley Pattern are as follows:

Point A must be a swing low, and point B must be a swing high.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing high.

The pattern is complete when the price action of the security reaches point D.

The Bat Pattern

The Bat Pattern is a bearish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after Scott M. Carney, who first described it in his book "Harmonic Trading: Volume One." The rules of the Bat Pattern are as follows:

Point A must be a swing high, and point B must be a swing low.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing low.

The pattern is complete when the price action of the security reaches point D.
 

The Butterfly Pattern

The Butterfly Pattern is a bullish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after Bryce Gilmore, who first described it in his book "Geometry of Markets II." The rules of the Butterfly Pattern are as follows:

Point A must be a swing low, and point B must be a swing high.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing high.

The pattern is complete when the price action of the security reaches point D.

The Crab Pattern

The Crab Pattern is a bearish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after Andrea Unger, who first described it in his book " Forex Patterns & Probabilities." The rules of the Crab Pattern are as follows:

Point A must be a swing high, and point B must be a swing low.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing low.

The pattern is complete when the price action of the security reaches point D.

The Cypher Pattern

The Cypher Pattern is a bullish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after Chris Svorcik, who first described it in his book "Elite Swing Trader." The rules of the Cypher Pattern are as follows:

Point A must be a swing low, and point B must be a swing high.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing high.

The pattern is complete when the price action of the security reaches point D.

The Shark Pattern

The Shark Pattern is a bearish reversal pattern that is created when the price action of security reaches certain Fibonacci ratios. The pattern is named after Tony Grice, who first described it in his book "Harmonic Trading of the Financial Markets." The rules of the Shark Pattern are as follows:

Point A must be a swing high, and point B must be a swing low.

Point C must be a Fibonacci retracement of point A, and point D must be a Fibonacci extension of point B.

Point C cannot be equal to point D, and point D must be a swing low.

The pattern is complete when the price action of the security reaches point D.

To conclude, in a previous blog post, we explored Harmonic Patterns in financial markets. Today, we will focus on Technical Patterns in FX markets. As the name suggests, Technical Patterns are patterns that are identified through the study of charts and historical price data.