TomHall

How To Trade The Cypher Pattern.

FX:EURUSD   Euro Fx/U.S. Dollar
Hi Traders,

After more positive feedback received from the Gartley & Bat Pattern explanation, I have drawn the final illustration explaining my interpretation of the Cypher Pattern
For those who have not yet seen the explanation for the Gartley or Bat Pattern I have attach the link in the comment section below.

Above Is an illustration of a complete Cypher Pattern and the rules and ratios needed to trade this pattern.

First things first, grab your Fibonacci tool and draw from the X to A leg of the initial move or impulse leg.
The Fibonacci ratio's you are looking for are the 0.382%, 0.50% and the 0.618%, price MUST at least touch or spike through the 0.382% but not touch or exceed the 0.618%.
The price reversal zone is shown in the white box.

Now you have the B leg we are looking for the C leg which is an extension of the A to B move.
On this occasion grab your Fibonacci Extension tool and draw from the A to B and then back to A, you are looking for a minimum of the 1.272% extension.

On the C leg the price reversal zone is a little narrow on many occasion, price MUST hit the 1.272% but not exceed the 1.414%, which is once again shown in the illustration above.

Once you have the X A B and C legs you are looking for the final piece of the jigsaw which is the D leg completion and the area you are looking to buy.
There are a couple of different ways to get the D leg however they both end up at the same price, for me personally I use the Fibonacci retracement tool.
To get the D leg take your Fibonacci tool and draw from the X to C leg which will give you a 0.786%.
Once price falls to the 0.786% all criteria's are met, at which point you would buy in anticipation that price will rise.

TARGETS:
When looking to take targets on this pattern the first step is to once again use your Fibonacci tool.
Take your Fibonacci tool and draw from the C to D leg, you are looking for the 0.382% and 0.618%.
If this is the method you are looking to use for targets you would have your broker take off half of your position at the 0.382% and the other half at the 0.618%
To protect the profits you have accumulated it is advised to move stop loss to breakeven once the 0.382% target 1 has been attained, thus giving you a risk free trade and money in the bank.

STOP LOSS:
When looking to place your stops there are again many ways this can be done, but should always be placed below the X leg.
Your risk reward should be a minimum of 1:1 on every trade to the 0.382%, if this can not be achieved then I would not personally take the trade.

CURRENCY PAIR:
This pattern like any other and is more profitable with certain currency pairs, you should do your own back testing on this before trading the pattern.

I hope this is a more in-depth insight to advanced patterns in particular the Cypher Pattern .
I am available via private message for any questions you may have.

WEBSITE:
http://www.UKForexSignals.com

DISCLAIMER:
Please note I am only providing my own trading information for your benefit and insight to my trading techniques, you should do your own due diligence and not take this information as a trade signal.
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@TomHall , C is an extension of the X to A move not the A to B move. can you check and confirm?
Reply
Obsy Obsy
@Obsy, that is, in the case of the cypher pattern
Reply
Hello Tom,
did it take a lot of time to adjust your ayes to spot patterns on the chart :)?
+1 Reply
TomHall TOP MitjaZunko
It is all about repetition, the more you master your craft the easier it becomes to train the eye.
Reply
Hi Tom, thanks for your charts, I just want to double check; for the cypher pattern you look for C by making the extension move from A - B - A and finding C at 1.272, is this correct? I'm backtesting this way and another at the moment because there seems to be some differential between how traders find it
+1 Reply
TomHall TOP Tiberious
That's correct, there are a number of ways to find the C leg but for me personally and my rules i am looking for a minimum of a 1.272% extension
Reply
Thank you Tom i have been waiting to enquire basically about the Cypher, so what i want to ask is do you ever consider the 127.2 Fib inversion from the C leg to the B leg to determine the D leg like we do with the Gartley? even though we are fully aware they both complete at the 78.6 ratio. Or perhaps with the Cypher as soon as it hits the 78.6 you trade it?
+1 Reply
TomHall TOP jabutheo1
To get the D leg i personally take a Fibonacci from X to C and look for the 0.786% to get long.
Hopefully I have answered it, if not shoot me another message.
Reply
jabutheo1 TomHall
Yes you have straight to the point. I had initially thought i could regard the cypher as a gartley looking at the D point completition only but now i see with the cypher specifically on the 78.6% we should be ready to enter trades. Thank you for your input
+1 Reply
TomHall TOP jabutheo1
Perfect, best of luck in your trades.
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