Understanding Harmonics
Understanding Harmonics
Harmonics
Learn Harmonics in Simplified Way!
Somesh Sharma
Contents
Table of Contents
Fibonacci Retracement..................................................................................................................................................... 4
Fibonacci in Uptrend ..................................................................................................................................................... 4
Fibonacci in Downtrend ................................................................................................................................................ 5
AB=CD Patterns ............................................................................................................................................................. 6
The Alternate AB=CD Patterns ...................................................................................................................................... 9
The Gartley Pattern ........................................................................................................................................................ 10
Gartley Pattern Properties .......................................................................................................................................... 10
How to Draw Bullish Gartley Pattern .......................................................................................................................... 12
How to Draw Bearish Gartley Pattern......................................................................................................................... 14
The Bat Pattern............................................................................................................................................................... 16
Bat Pattern Properties ................................................................................................................................................ 16
Difference Between Bat & Gartley Pattern................................................................................................................. 17
How to Draw Bullish Bat Pattern ................................................................................................................................ 18
How to Draw Bearish Bat Pattern ............................................................................................................................... 20
Alternate Bat Pattern .................................................................................................................................................. 22
How to Draw Bullish Alternate Bat Pattern ................................................................................................................ 23
How to Draw Bearish Alternate Bat Pattern ............................................................................................................... 25
The Crab Pattern............................................................................................................................................................. 27
Crab Pattern Properties .............................................................................................................................................. 27
Deep Crab Properties .................................................................................................................................................. 27
How to Draw Bullish Crab and Deep Crab Pattern ..................................................................................................... 28
How to Draw Bearish Crab and Deep Crab Pattern .................................................................................................... 30
The Butterfly Pattern ..................................................................................................................................................... 33
Butterfly Pattern Properties........................................................................................................................................ 33
How to Draw Bullish Butterfly Pattern........................................................................................................................ 35
How to Draw Bearish Butterfly Pattern ...................................................................................................................... 37
The Cypher Pattern ........................................................................................................................................................ 40
Cypher Pattern Properties .......................................................................................................................................... 40
How to Draw Bullish Cypher Pattern .......................................................................................................................... 41
How to Draw Bearish Cypher Pattern ......................................................................................................................... 43
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The Shark Pattern ........................................................................................................................................................... 45
Shark Pattern Properties ............................................................................................................................................. 45
How to Draw Bullish Shark Pattern ............................................................................................................................. 46
How to Draw Bearish Shark Pattern ............................................................................................................................ 48
Summary ......................................................................................................................................................................... 55
Cheat Sheet..................................................................................................................................................................... 56
Sources & Reference - Air Forex One and Scott Carney. Special Thanks to
Reincarnation Sir.
For Learning more about harmonics and getting daily setups please do join our
Telegram Group - https://t.me/optimusview/
2
Fibonacci Retracement
The Fibonacci retracement is composed by levels based on numbers where the
price has a high probability to reverse.
Fibonacci in Uptrend
Let’s imagine that we have a bullish AB impulsive movement and suddenly the
price decides to slow down and make a pullback and enters in a small corrective
phase before continuing with the uptrend. At that time, thanks to Fibonacci
retracements, we can possibly know when the price will decide to reverse and
continue its upward trajectory. In other words, we will be interested in looking
for a point C through retracements of Fibonacci. This point C will be important
for us to surf in the next bullish wave D.
3
Fibonacci in Downtrend
The principle is exactly the same, but the reverse. Let’s imagine that we have an
impulsive wave to the downside AB and suddenly the price decided to breathe,
making a pullback and enter in a correction phase before continuing with the
main trend to the downside. At that time, thanks to Fibonacci retracements, we
can possibly know when the price will potentially decide to reverse and continue
its downward trajectory. In other words, we will be interested in looking for a
point C through retracements From Fibonacci. This reversal will be important for
us to surf the next wave D.
The examples we have seen shows that the golden ratio of 0.618 can be a great
help to find imaginary levels of strong probability. We want to be transparent
and it’s important to know that not all the time the reverse point occurs at that
level We mainly focus on different levels: -
Retracement level to 0.382: pullback in a strong and rapid trend.
Retracement level to 0.50: Average pullback
Retracement level 0618: golden number( where mainly all the reverse happens)
Level 0786 usually this level is where we place the stop-loss level or a little further back when you
have an entry on the 0618 level. However, sometimes price, can reach that level and reverse.
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The market can move up and down very slowly or fast. For this reason it is very
important to create a habit to visualize the future movement.
If the market makes a retracement level at 0.382, 0.50 or 0.618% and the retracement
is confirmed, then there is a good chance that the market will form a D wave that can
reach the level of -0.272 or -0.618.
The only way to validate a reversal is to be attentive to the shape of Japanese
candlestick patterns. Not because the price has reached the golden number means
that it will reverse. In the forex and financial markets, anything is possible. Expect
different scenarios and play with probabilities.
The more we have are favourable factors in our scenarios, the more likely to win and
make a good trade you have. This is why it is important to find support, resistance,
trend lines, or even moving averages, etc ...
The stop-loss should be placed at least at retracement 0.786 or better even
approximately 10-15 PIP above or below the level Fibonacci 0.786
It is recommended to set the take-profit level just before the planned extension of the
wave D (0 or often -0.272 - 0.618 which depend on the evolution of the price). It is
preferable to place the take-profit 10 PIP before resistance (if it’s to the upside) or PIP
10 above the support (to the downside).
If wave C is back and there is a candlestick closed near the level of 78.6% and there is
no Japanese candlesticks confirm a reversal, it is possible that the trend spills, and
retracements are not valid.
5
AB=CD Pattern
Fibonacci retracements are excellent to find pullbacks and trade in the direction
of the trend, however, their use involves more than just retracements. In the
world of forex there is a lot of geometric figures. Some say it is pure myth and
they do not serve, but we rely on our experience.
6
The Bearish AB=CD Pattern
The Bearish AB=CD should possess a distinct symmetry with the completion point
of the pattern complementing the BC projection and defining a precise PRZ (see
Figure 4.10).
Again, it is important to point out
that the “0.382;0.886” Fibonacci
retracement range for the C point
can be any of the Harmonic Trading
ratios that fall between these two
constraints.
Therefore, the C point can be
0.382, 0.50, 0.618, 0.707, 0.786, or
0.886.
Referring to the reciprocal ratios,
this correlates into a BC projection
that can either be a 1.13, 1.27,
1.41, 1.618, 2.0, 2.24, or 2.618. In
some rare cases, a 3.14 projection
can be utilized.
For example: The Below following image shows a bullish ABCD pattern. The price
touched the golden figure ABCD 0618 and was completed when he reached -
0272 and -0618 extension. At this time, the price is reversed and a new impulse
wave starts. If you remember from the previous section, we explain that these
extensions correspond to take profit zones. In fact, if you look at the image
above, we can see how the price once it reaches the areas -0272 and 0618 is
reversed. Finally, as already mentioned, many traders expect this model to be
completed to wait until the price will return either to buy or to sell. The second
image is a clear example of the efficacy of the famous ABCD pattern so keep an
eye on this figure to trade a reversal setups. It’s important to mention that this
ABCD pattern works even more if you use confluence factors such as key levels.
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After…
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Alternate AB=CD Patterns
The Perfect Bullish AB=CD Pattern The Perfect Bearish AB=CD Pattern
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The Perfect AB=CD Pattern
1. Precise 0.618 C point retracement of the AB leg
2. 1.618 BC projection
2. C point retracement can vary between a 0.382 to a 0.886, although 0.618 is preferred.
3. BC projection can vary from 1.13 to 3.618 and depends upon the C point retracement.
Equivalent AB=CD.
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The Perfect Gartley
4. Equivalent and Perfect AB=CD (0.618/1.618) with distinct symmetry and time
duration for each leg.
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How to Draw Bullish Gartley Pattern?
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4. Draw AB Extension to Find Point D, AB Extension must not exceed 1.618-1.27
Extension. And precise 0.786 D Point retracement of the XA is needed.
5. Now we got all XABCD Points for Gartley Pattern! This is our final Gartley
Pattern.
6. You Can Now Short from Point C to D or you can go long from D. if you are
entering from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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How to Draw Bearish Gartley Pattern?
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4. Draw AB Extension to Find Point D, AB Extension must not exceed 1.618-1.27
Extension. And precise 0.786 D Point retracement of the XA is needed.
5. Now we got all XABCD Points for Gartley Pattern! This is our final Gartley
Pattern.
6. You Can Now Short from Point C to D or you can go long from D. if you are
entering from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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The Bat Pattern
Precise 0.886 D Point Retracement of the XA as the defining limit within the
PRZ.
2. Precise 0.886 D point retracement of the XA as the defining limit within the PRZ.
3. 2.0 AB Extension.
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The Perfect Bullish Bat The Perfect Bearish Bat
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How to Draw Bullish Bat Pattern?
1. Draw XA Line.
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4. Draw AB Extension to Find Point D, AB Extension of Minimum 1.618 and
Max 2.0 – 2.618 Extension. And precise 0.886 D Point retracement of the
XA is needed.
5. Now we got all XABCD Points for Bat Pattern! This is our final Bat Pattern.
6. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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How to Draw Bearish Bat Pattern?
1. Draw XA Line.
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5. Now we got all XABCD Points for Bat Pattern! This is our final Bat Pattern.
6. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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The Alternate Bat Pattern
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How to Draw Alternate Bullish Bat Pattern?
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 38.20% or less.
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4. Draw AB Extension to Find Point D, AB Extension of Minimum 2.0 and Max
3.16 Extension. Ideally 2.618 & 3.14. Precise 113% D Point retracement of the XA
is needed.
5. Now we got all XABCD Points for Alternate Bat Pattern! This is our Alt Bat.
6. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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How to Draw Alternate Bearish Bat Pattern?
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 38.20% or less.
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5. Now we got all XABCD Points for Alternate Bat Pattern! This is our Alt Bat.
6. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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The Crab Pattern
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How to Draw Bullish Crab/Deep Crab Pattern?
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 0.618 or less for Crab Pattern and 0.886 for Deep Crab Pattern.
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4. Precise 1.618 D Point XA Extension is needed.
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6. Now we got all XABCD Points for Crab and Deep Crab Pattern! This is our
Crab/Deep Crab Pattern.
7. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
How to Draw Bullish Crab/Deep Crab Pattern?
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 0.618 or less for Crab Pattern and 0.886 for Deep Crab Pattern.
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3. Draw Fibonacci Retracement from A to B. We have to find point C which is
retraced between 38.20% - 88.60%.
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5. Draw AB Extension to Find Point Extreme AB Extension of 2.618, 3.14,
3.618.
6. Now we got all XABCD Points for Crab and Deep Crab Pattern! This is our
Crab/Deep Crab Pattern.
7. Now Enter from point D then AD retracement of 38.20% will be your first target and
61.80 will be your second target!
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The Perfect Crab Pattern
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The Bullish Butterfly Pattern The Bearish Butterfly Pattern
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1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 78.6%.
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4. Draw XA Extension of 1.27 For D Point.
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6. Now we got all XABCD Points for Butterfly Pattern! This is our Butterfly
Pattern.
7. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
How to Draw Bearish Butterfly Pattern?
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced at 78.6%.
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3. Draw Fibonacci Retracement from A to B. We have to find point C which is
retraced between 38.20% - 88.60%.
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5. Draw AB Extension to Find AB Extension of 1.618.
6. Now we got all XABCD Points for Butterfly Pattern! This is our Butterfly
Pattern.
7. Now Enter from point D then AD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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The Cypher Pattern
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How to Draw Bullish Cypher Pattern?
1. Draw XA Line.
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4. Precise 78.6% D Point XC Retracement is needed.
5. Now we got all XABCD Points for Cypher Pattern! This is our Cypher
Pattern.
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6. Now Enter from point D then CD retracement of 38.20% will be your first
target and 61.80 will be your second target!
How to Draw Bearish Cypher Pattern
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
retraced between 38.20 %- 61.8%.
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4. Precise 78.6% D Point XC Retracement is needed.
5. Now we got all XABCD Points for Cypher Pattern! This is our Cypher
Pattern.
6. Now Enter from point D then CD retracement of 38.20% will be your first
target and 61.80 will be your second target!
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The Shark Pattern
45
How to Draw Bullish Shark Pattern
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
38.20% - 78.6% of XA Retracement. Ideally 50%.
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4. Draw XA Extension of 88.6 - 1.13 and AB Extension of 1.618 or 2.24.
5. Now we got all XABCD Points for Shark Pattern! This is our Shark Pattern.
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How to Draw Bearish Shark Pattern
1. Draw XA Line.
2. Draw Fibonacci Retracement of X and A. We have to find Point B which is
38.20% - 78.6% of XA Retracement. Ideally 50%.
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4. Draw XA Extension of 88.6 - 1.13 and AB Extension of 1.618 or 2.24.
5. Now we got all XABCD Points for Shark Pattern! This is our Shark Pattern.
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The 5-0 Pattern
1. Draw XA Line.
2. Draw Fibonacci Extension of X and A. We have to find Point B which is
1.13 to 1.618 of XA Extension.
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3. Draw Fibonacci Extension of AB. We have to find point C which is 1.618
to 2.24.
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5. Now we got all Valid Points for 5-0 Pattern! This is our 5-0 Pattern.
1. Draw XA Line.
2. Draw Fibonacci Extension of X and A. We have to find Point B which is
1.13 to 1.618 of XA Extension.
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3. Draw Fibonacci Extension of AB. We have to find point C which is 1.618
to 2.24.
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5. Now we got all Valid Points for 5-0 Pattern! This is our 5-0 Pattern.
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Summary
Pattern Properties
B = 61.8% of XA Retracement.
Gartley
C = 38.2 to 88.6 AB Retracement.
Bat
Bat
B = Less than 0.618 XA Retracement Ideally 38%-50%.
Alternate Bat
B = 78.60 XA Retracement.
Butterfly
C = 38.20-88.60 AB Retracement.
D = 78.6 XC Retracement.
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