Patterns are nice to draw, and sometimes they work well for trades, but are they enough? No, not really. Markets continually move the same way over and over. Accumulation>Leg Up>Distribution>Leg Down. This happens on every time frame. I see lots crazy all over the place, drawn by tradingview members, and most do not realize what's important. Patterns are simply either accumulation or distribution. The larger the timeframe, the large the move that is being setup. The 240 chart on the left shows some sort of accumulation pattern. I don't know the specific name, and I probably didn't draw it correctly, because it doesn't matter. I want to know the why behind the structure. The answer, has to do with legs, and in this case, accumulation. People do not understand that accumulation happens on the way down. We accumulate to offset previous momentum, and always and the end of a leg down. Did we not just have a leg down on the weekly chart? Yes we did. Switch to the monthly, and you will see the huge leg down, and how then you will see how the weekly is trying to offset that momentum buy accumulating. None of the books on harmonics seem to explain this simple concept. Timeframes work together to achieve the trend of the longer term. Think about it logically. How many candles does it take to create a monthly candle from the daily perspective? About 30 candles, right? So how do we know which will work? We simply look at our legs on all the timeframes, and fit our current timeframe leg into the bigger time frame. Here I fit the 240m into the Weekly chart. We can even break our legs into sub legs, as we continue zooming in. So when we see these harmonics, what should we ask ourselves? What leg am I currently retracing? What leg am I in? Have these legs been exhausted yet? Am I accumulating or distributing to form a first touch? Do I have momentum to complete this pattern/move? Learn the why of the move. I do not mean learn the news. I mean, learn the technical reason for the move. Hope this helps.
Join us at http://www.tradevulture.com