The Amazing Harmonic Pattern Trading Strategy will give you a whole new understanding of the price

action. Our team at Trading Strategy Guides knows that the geometric patterns that can be found in
nature, the same anomalies can be found in financial markets as well. This ability to repeat and create
these intricate patterns is what makes the Forex harmonic patterns so incredible.

We can distinguish six basic Forex harmonic patterns:

● Gartley ● Butterfly ● Crab ● Bat ● Shark ● Cypher

One. In technical analysis, the Butterfly harmonic pattern is a reversal pattern composed of four legs.
A leg is a swing wave movement that connects and is composed of a swing high and a swing
low. Butterfly harmonic pattern rules summary:

1. AB= 0.786 or 78.6% retracement of the XA swing leg;

2. BC= minimum 38.2% – maximum 88.6% of AB swing leg;

3. CD= minimum 1.618 – maximum 2.618 of AB swing leg;

4. CD=minimum 1.272% – maximum 1.618% of XA swing leg;

The Butterfly harmonic pattern depends upon the B point as it defines the structure and sets up
the other measurements within the pattern to define the trade opportunities. To the Butterfly pattern
the B point, it must possess precise 78.6% retracement of the XA swing. Other rules that redefine
the structure further includes the BC projection that must be at least 1.618 measurements. Also, the
Butterfly pattern must include an equivalent AB=CD pattern, it’s a minimum requirement; however, the
alternate 1.27AB=CD is more common for this structure. The 1.27XA projection is the most critical
number in the potential reversal zones. And, finally, the C point must be within the range of 0.382-0.886
retracement. You can start drawing the butterfly pattern as soon as you have the first two legs of the
pattern. Once you have the points X, A and B you can begin monitoring the price action and look
for confirmation that wave C conforms the Butterfly pattern rules.

Ideally, as a trader, you would like to enter at the completion of point D. As we established earlier,
the point D of the Butterfly Forex harmonic pattern can develop anywhere between 1.27 –
1.618 Fibonacci extension of A leg. Since the market is not a perfect place we’ll initiate a buy order
once the markets hit the 1.27 Fibonacci extension.

Two. What is the Cypher Pattern Forex? In the harmonic pattern world, the Cypher pattern forex is a
four leg reversal pattern that follows specific Fibonacci ratios. The Cypher pattern forex appears less
frequent than other harmonic patterns because it’s hard for the market price to satisfy such rigid
Fibonacci ratios. The Cypher pattern forex needs to satisfy the following Fibonacci rules:

AB= 0.382 to 0.618 retracement of the XA swing leg; ● BC= extend to minimum 1.272 and maximum
1.414 of the XA swing leg; ● CD= retrace to 0.786 of the XC swing leg;

The first rule of the Cyper pattern Forex is the retracement from X up to A has to come down and touch
the 0.382 Fibonacci ratios but can’t close below the 0.618 Fibonacci ratios. Between the 0.382 and 0.618
Fibonacci retracements of XA swing-leg, we have our third point of the Cypher pattern forex labeled
“B”. The next rule of the Cypher pattern forex is a Fibonacci extension of the XA leg that comes in
1.27 but it doesn’t exceed the 1.414 Fibonacci ratios, this point of the move is labeled “C” and
completes the BC swing-leg of the Cypher pattern forex. The final leg of the Cypher pattern where our
orders will be executed, which is at the finishing point D. The point D is located at the 0.786
Fibonacci retracements of the entire move started from X up to C.

Three. The Harmonic Bat pattern strategy will teach you how to trade the bat pattern and start
making money with a new exciting approach to technical analysis. The bat pattern market strategy is
part of the Harmonic trading patterns system of trading. The Bat pattern is similar to the Cypher
harmonic pattern but it follows different Fibonacci ratios. One of the key ways to differentiate a Bat
structure from a Cypher pattern is the B point which, if doesn’t go beyond the 50% Fibonacci
retracement of the XA leg then it’s a Bat, otherwise it can turn into a Cypher structure. The bat pattern
market strategy is suitable for all time frames and for all markets, but we have to keep in mind that on
lower time frames using the Bat pattern market strategy comes with its own challenges because the Bat
pattern has the tendency to show up on less frequent on lower time frames. Now… Before we dive
deeper into the harmonic bat pattern strategy, let’s look at what indicators we need to successfully
trade this strategy. The Fibonacci retracement and ratios are at the core of harmonic trading. Thanks to
the rapid advancement in the technical analysis field we can find some very useful indicators to actually
help us plot the harmonic patterns and these Fibonacci ratios. You can find the Harmonic Pattern
Indicator on most popular Forex trading platforms (TradingView and MT4) in the indicator section.

How to Trade the Bat Pattern The bat pattern market strategy like any other harmonic pattern is a four-
leg reversal pattern that follows specific Fibonacci ratios. A proper Bat pattern needs to fulfill the
following three Fibonacci rules: ● AB= minimum 38.2% and maximum 50% Fibonacci retracement of XA
leg; ● BC= minimum 38.2% and maximum 88.6% Fibonacci retracement of AB leg; ● CD= 88.6%
Fibonacci retracement of XA leg or between 1.618% – 2.618 Fibonacci extension of AB leg;

The first thing to look for when identifying the Bat pattern (see figure below) is the impulsive leg or the
XA leg. We’re looking for a strong move up or down depending if we either have a bullish Bat structure
or a bearish Bat structure. The next thing that needs to be satisfied for a valid Bat pattern structure is a
minimum 0.382 Fibonacci retracement of the XA leg and it can go as deep as 0.50 Fibonacci retracement
of the XA leg, but it can’t break below the 0.618. This will create the B leg of our Bat pattern.
Four. The Gartley Harmonic pattern trading strategy will teach you how to trade the gartley pattern
and start making money with a new concept to technical analysis. The gartley harmonic pattern is part
of the Harmonic trading chart patterns. Over the years many different people have been looking at the
market seeing different things but Scott Carney who found the harmonic patterns noticed that a certain
pattern always appear to lead to good trading opportunities. This chart pattern is called the Gartley
chart pattern also known as the Gartley 222.

How to Trade the Gartley Chart Pattern The Gartley market strategy like any other harmonic pattern is a
four-leg reversal pattern that follows specific Fibonacci ratios. A proper Gartley chart pattern needs to
fulfill the following three Fibonacci rules: ● AB= retrace to 0.618 Fibonacci Retracement of XA leg; ● BC=
minimum 38.2% and maximum 78.6% Fibonacci retracement of AB leg; ● CD= Poses a target between
1.27 – 1.618 Fibonacci extension of AB leg or an ideal target of 0.786 of XA leg. The Gartley harmonic
shares some similarities with the Butterfly Harmonic Pattern.

The key Fibonacci ratio that makes the Gartley apart from the other harmonic chart patterns is
the shallow retracement of the AB swing leg which is only 61.8% of the XA leg. Another characteristic of
the Gartley 222 pattern is the symmetry that can be found inside the A through D swing wave. The AB
swing leg can be equal to the CD swing leg to offer us an ideal low risk high reward entry point. Let’s
take one step forward and see how you can make money applying the Gartley trading rules. Gartley
Harmonic Pattern Trading Strategy The Gartley chart pattern is only giving us a possible entry point
without telling much about where to place our protective stop loss and where to take the profits. Now,
we can keep things simple and use the Gartley price structure to our advantage. The Gartley Market
Strategy has been tested across different asset classes (currencies, commodities, stocks and
cryptocurrencies).

Five. The harmonic pattern Crab is another unique harmonic patterns which has a price structure
that looks the same as the Butterfly chart pattern. The difference between the Crab pattern and
the Butterfly pattern is the CD swing leg which has a bigger extension. Also, the Crab pattern frequently
experiences very sharp and volatile price action and it’s very important to anticipate higher volatility
when executing your trades at the pattern completion point. Now…

How to Trade the Crab Chart Pattern The Crab market strategy like any other harmonic pattern is a four-
leg reversal pattern that follows specific Fibonacci ratios. A proper Crab pattern needs to fulfill the
following three Fibonacci rules: ● AB= retrace between 0.382 – 0.618 Fibonacci Retracement of XA
leg; ● BC= minimum 38.2% and maximum 88.6% Fibonacci retracement of AB leg; ● CD= Poses a target
between 2.24 – 3.618 Fibonacci extension of AB leg or an ideal target of 1.618 of XA leg. The Crab
harmonic pattern shares some similarities with the Butterfly Harmonic Pattern. Note* the Fibonacci
retracement and ratios are at the core of harmonic trading. Make sure the above rules are satisfied
before you trade the Crab harmonic pattern.
The harmonic Crab is an extreme harmonic pattern which means price action will typically be
volatile and be extreme as it enters the Potential Reversal Zone (PRZ). In a bullish Crab typically the
highest number in the harmonics support zone is going to be the alternate ABCD component that is
either 1.24 or 1.618AB=CD. However, in most cases, the Crab pattern is going to have a 1.618 alternate
AB=CD, but we still allow the 1.24 to define a valid structure, but in most cases, we’re looking at 1.618
alternate AB=CD and this is going to be the highest number in the PTZ.

Six. Retail traders are always going to be a small fish in the shark infested ocean. There are
more powerful traders in the market and if you want to learn swimming with the sharks we present
the Shark Harmonic trading strategy. It’s necessary to read the introductory article into the harmonic
patterns as this will give you a better understanding of how to trade the Shark Harmonic Pattern. The
Shark pattern may be a relatively new harmonic pattern. It was discovered only recently in 2011 by Scott
Carney but it has the same features like all other harmonic patterns because it follows certain Fibonacci
ratios for its structure to be validated. The Harmonic Shark Pattern has some similarities with the Crab
harmonic pattern because both of these harmonic patterns shave an overextended point C. The bullish
Shark pattern can be traded on all time frames but we recommend only to trade harmonic chart pattern
from the 1 hour time frame and above. Now…

How to Trade the Shark Harmonic Pattern The Shark trading strategy like any other harmonic pattern is
a five-leg reversal pattern that follows specific Fibonacci ratios. The harmonic Shark pattern
differentiates itself from the other harmonic patterns by its five points setup being labeled as O, X, A, B,
C. Also the termination point of leg B ends above wave X and extend to the minimum of 1.13 and
maximum of 1.618 Fibonacci ratios. A proper Shark pattern needs to fulfill the following three Fibonacci
rules: ● AB= retrace between 1.13 – 1.618 Fibonacci Extension of XA leg; ● BC= extends to 113%
Fibonacci extension of 0X leg; ● CD= Poses a target of 50% Fibonacci Retracement of BC leg Note* the
Fibonacci retracement and ratios are at the core of harmonic trading. Make sure the above rules are
satisfied before you trade the Shark harmonic pattern.

The Shark pattern is an emerging 5-O pattern as the Harmonic Shark pattern is within the 5-O
pattern structure. The structure of the Shark pattern means that unlike the other harmonic patterns, all
trades are taken based on the point C while the point D is actually used as a pre-defined profit
target. Ideally, the completion point of the CD swing-leg terminates at 50% Fibonacci retracement of BC
leg and also must satisfy the AB=CD condition. This is the most common way the Harmonic Shark pattern
is traded by trying to capture the last move of a complex pattern entering at C with a protective stop
loss above/below the 2.24 of AB retracement and targeting the 50% retracement of the BC swing-leg.

The way we’re proposing to trade this pattern is to enter at the open of the next candle after
our Harmonic indicator has spotted the Shark pattern. So, to clear up the confusion, as soon as the C-leg
is established, we enter at the market with a protective stop loss at the 2.618 extension of AB swing-leg.
The reason why we use two possible TP zones is because in essence the Shark pattern leads to the 5-0
pattern (see Figure above) and once we reach the D point it can reverse, however, the Shark pattern can
be a reversal pattern in itself and that’s why we’re using as a second target the 100% Fibonacci ratio.