ninjabenja
Short

When do you acknowledge a harmonic pattern has failed?

BITSTAMP:BTCUSD   Bitcoin / Dollar
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The answer to the question that I've been asking myself, "When do you know when to give up on a harmonic pattern?" is simply - you'll know, when price action tells you.

In the image above I've pointed out where stops should be placed for either of the patterns in play. The Bullish Bat pattern on the left has yet to complete and it's now been almost 2 days since price action passed over the D point. If price were to all the sudden "tank" in the next 24 hours or so and tag my entry near $560, I would call that a successful completion of the pattern and take my targets accordingly at .382 and .618 of the XA leg. However, if another six days goes by and price after meandering around eventually found it's way down to that level, I wouldn't try to tie the two together and trade off a pattern that price action left behind a week ago. This gray area of pattern interpretation simply illustrates the point that a harmonic pattern should be weighed against market sentiment, fundamentals (to a degree) and other solid indicators such as RSI , MACD and Stochastics. There's no 1 sliver bullet.

The validated Gartley pattern on the right which initially stole our thunder, has since hit both our target #1 and target #2. I'm now trailing stops to previous structure and watching for price to continue lower along the top of the trend channel.
Informational post. In Harmonic Trading Vol. 2, Carney thoroughly suggests the use of the RSI, an indicator most, if not all Harmonic traders should consider incorporating. Pertaining to the use of time v. pattern completion, I believe in Vol. 1 Carney states multiplying the time taken from X to B and multiplying it by .382 and 1.618 should provide a range for which the pattern must be completed. I must admit I haven't tested this myself but I haven't come across many uncompleted patterns that don't somehow invalidate themselves.
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ninjabenja PRO MarshallFX_
Thanks for the comment! +1 ... I really need to read those books.
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