Get to know the Harmonic Patterns Trading technique

Harmonic Patterns are geometric patterns drawn on financial market asset price charts using Fibonacci numbers as benchmarks. Harmonic Pattern trading techniques attempt to predict price movements and determine the exact reversal points for entry (open trading positions) and exits (close positions). This technique is popularly used by forex and CFD (Contract for Difference) traders because it applies to various timeframes and is considered more accurate than the use of technical indicators in general.

The technique of trading with Harmonic Pattern is applied based on the premise that price patterns that have formed in the price history will always be repeated.
Many say that the trading technique with Harmonic Pattern was developed by Scott Carney through his book, "Harmonic Trading"

How to Draw Harmonic Patterns

The first Harmonic Pattern now called the Gartley pattern. After that, experts from time to time emerge to disseminate Harmonic Patterns from the results of their research, so that it is now known that there are various types of Harmonic Patterns with different rules.

In order to be able to apply trading techniques with Harmonic Patterns, a trader must first understand the application of Fibonacci Retracement and Fibonacci Extensions. After that, consider the forms and rules of procedure for drawing each Harmonic Pattern.

1. Open Metatrader or another trading platform that you are using.

 2. Select the chart of your chosen currency pair.

3. Set a timeframe on H4 or D1 (other timeframes are also possible, but usually traders use one or both of these timeframes).

4. Monitor whether there is potential for certain Harmonic Patterns to be formed. For example, here we will explore ABCD patterns which are the simplest Harmonic Pattern. The ABCD pattern can signal both Bullish and Bearish movements

Weaknesses and Strengths Harmonic Pattern

One of the reasons why many traders like trading techniques with Harmonic Pattern is its reliability at identifying points of reversal and predicting how long a trend will last. However, that does not mean this technique is 100% correct and there are no weaknesses at all.

Harmonic Pattern trading techniques require accuracy and accuracy in order to be able to examine price movements accurately. Often, we see as if the price movement has formed a certain pattern, but in fact has not reached the required Fibonacci level. If that happens, then know that the patterns that emerge may not necessarily be called Harmonic Patterns, are less reliable, and may be misdirected.