Forex Trading Strategy: The Key to Successful Harmonic Pattern (3)

Forex Trading Strategy: The Key to Successful Harmonic Pattern (3)

In the previous article, one of the “derivative” patterns of harmonic pattern has been discussed, namely Gartley pattern . This pattern can be used as a reference for technical analysis in forex trading .

On this occasion we will also discuss the “derivative” of further harmonic patterns .

Actually what will be presented this time is the development of the Gartley pattern. Uniquely, these patterns are named after animals.

Among others are:

  • Crab (crab)
  • Bat (bat)
  • Butterfly (butterfly)

Let us just call these three pattern models the “mutations” of the Gartley pattern that we have studied in the previous article.

Basically the three patterns that will be discussed are not much different from the Gartley pattern itself. What distinguishes each other (later you can see for yourself) is the Fibonacci ratio used in each pattern.

We just start.

The Crab

This pattern was first introduced in 2000 by a heavy harmonic pattern fan named Scott Carney. He named this pattern: Crab .

Scott Carney argues that this pattern is the most accurate among all variants of harmonic patterns because of the extreme potential reversal area ( Potential Reversal Zone ) when using XA movement as a reference.

This pattern has a good risk-to-reward ratio because you can place a stop loss as narrow as possible. But to be able to use it, you must first know what are the requirements of a good Crab pattern.

Crab pattern must have the following requirements:

  1. AB movement must be a correction as far as 38.2% or 61.8% by using XA as a reference.
  2. The BC movement is a retracement as far as 38.2% or 88.6% by using AB as a reference.
  3. If you use correction 38.2% to measure BC (with AB as a reference), then the CD movement must be an extension (extension) of 224% with BC as a reference. But if you use a ratio of 88.6%, then the CD must be an extension of 361.8%.
  4. CD is an extension of 161.8% of XA.

The bat

The Bat appears a year after the Crab. This Bat Pattern was introduced by Scott Carney in 2001. This Bat Pattern has the characteristic “leg” last (so far we call CD) is a correction ( retracement ) as far as 88.6% of XA.

The Bat Pattern has the following criteria:

  1. AB is a retracement of 38.2% or 50% of XA.
  2. BC can be a retracement of 38.2% or 88.6% of AB.
  3. If the BC retracement is 38.2% of AB, then the CD must be an extension of 161.8% of BC. But if the BC retracement is 88.6% of AB, then the CD is an extension of 261.8% of BC.
  4. CD is a retracement of 88.6% of XA.

The butterfly

Then the Butterfly appeared from his cocoon. This Butterfly Pattern was introduced by Bryce Gilmore. Characteristic of this pattern is correction AB is a retracement of 78.6% of XA.

Following is the presentation of the characteristics of the Butterflypattern:

  1. AB is a retracement of 78.6% of XA.
  2. BC can be a retracement of 38.2% or 88.6% of AB.
  3. If the BC retracement is 38.2% of AB, then the CD is an extension of 161.8% of BC. But if the BC retracement is 88.6% of AB, then the CD is an extension of 261.8% of BC.
  4. The CD is an extension of 127% or 161.8% of XA.

These patterns are obviously not as simple as ABCD or Three-Drive Pattern. Therefore it is advisable to really study it before applying it as one of your forex trading strategies . This method can help you to maximize every opportunity that is often difficult to recognize without the knowledge of harmonic patterns .

See you later in the next article, where we will discuss simple ways of applying analysis using harmonic patterns.

Regards

Next Articles :              1        2        3          4

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