Fxprotrader

How To Trade Harmonic Patterns The Right Way (Educational)

FX:EURUSD   Euro Fx/U.S. Dollar
There is a debate among traders about harmonic patterns , and if they bring the desired results. I believe that most of the systems and strategies work, but only if you know how to use them. Usually traders who trade the harmonic pattens, just open a chart and try to indetify a pattern and as soon as it completes they jump into the trade. In my eyes this is a wrong approach.

The best way to trade harmonic patterns is to trade them when they complete at key zones or levels and always trade patterns which respect what the zone is standing for. So if we have drawn a zone where we expect price to bounce and go up, look for bullish harmonic patterns . Ignore anything bearish . This way you filter your patterns and you trade the ones which have great potential.

In this chart in the EURUSD             i have drawn a key zone using simple tools like fibonacci and trendlines . In the daily chart we may see that price is moving into a rising channel which is the first thing which makes me look for buy setups. Secondly we have a 0.618 retracement of an impulsive move started from the low parallel of the channel. Lastly we have noticed that this retracement is almost equal to the previous retracement which also happend in the channel.

All of these three factors meet in one place. This little pink box, is our KEY ZONE. The hardest part is over..! We now look for any BULLISH harmonic pattern to form in that zone.

In the 30min chart we have a bullish cypher pattern completion (see below) which worked wonders..! Not only because cyphers are high probability patterns, but because it formed into a zone which was screaming "BUY"..

So do harmonic patterns work? Absolutely! Just trade them at the right place, reading the structure first..!

P.S: The above is only my view on harmonic patterns . Me saying that harmonics work great, doesn't mean that i disrespect the ones who believe that they don't work. If this post breaks any of the rules of tradingview, i will edit it accordinally when a moderator asks me to.
Comment:
snapshot
Nice. Can you elaborate on the key zone? What does it mean for you and what can happen in the key zone that will cause you to abandon trade or double up and go for it?
Reply
Can you be a little more specific?
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saad2 Fxprotrader
on original graph: is the key zone for every point that touches your bottom parallel? So there was a key zone at around March 2nd as well?

Is it a key zone simply because a break below it could mean the trade pattern is invalid then?

What needs to happen at the key zone for the trade set up to become invalid (as in, since it breaks key zone, the trade is no longer valid..)
+2 Reply
Great stuff. Thanks.
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Fxprotrader Metafora
Thank you..
Reply
Exactly! Well said my friend
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Fxprotrader glennmercer
Thank you..
Reply
Very good analysis. Well done
Reply
Fxprotrader -Andrew-
Thank you Andrew..
Reply
EURUSD - Pure Best Technical Levels
What do you think, is there going to be third wave?
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