In my previous post, I mentioned about a typical projections where NIFTY may witness volatile and sharp upmove with an ability to crack up previous High.
However, on a larger frame it suggests a nearly perfect (Please refer my comments on the chart). This suggest that upward journey has three major hurdles at 0.618% 0.786% and 0.886% levels and even immediately at 8,620 resistance.
Trading these two patterns (Crab's reversal & Reversal) in combination would really be interesting and challenging. I expect a war of tug at around 8,900 level where 0.886% retracement has a confluence with pattern's right shoulder.
Please refer following excerpts about Harmonic Patterns:
1. The most important point (Pivotal) in all Harmonic Patterns is POINT - B which is nothing but a Retracement of (X- A) leg to point B or simply the leg (A – B).
2. There are three very important aspect of all Harmonic Pattern from trading perspective:
a. Leg (A – B) or Point B gives clue for future Harmonic Pattern which may evolve.
b. We always have Point D as an indicative completion of Harmonic Pattern. It is a Point “D” that is also a PRZ.
c. Target Point "D" which falls within a (PRZ) defines the completion of any Harmonic Pattern. Point D can be projected in two ways (and) must be considered as "Either / or"
i. Extension X – D (Ideally must have component) TGT-2
ii. Extension of B – D (Complementary to above) TGT-1
3. Following are the Extension Patterns
a. Bullish Butterfly
b. Bearish Butterfly
c. Bullish Crab
d. Bearish Crab
e. Alternate Bat
4. Following are Retracement Patterns
f. Bullish Gartley
g. Bearish Gartley
h. Bullish Bat
i. Bearish Bat
5. X-A-B-C-D Explained
X Start of the Major Trend
A End of trend
B First pull-back of the Trend
C Pull-back of the pull-back (Not suppose to exceed Point - A)
D Target of point C
Now refer following :
There are two decisive elements of Pattern Study:
• Retracement of (X – A) to Point “B”
• Location of Point “D” – (PRZ) that is measured by Fib values of (B – D) and (X – D)
• There is a direct “if-Than” relationship between (A – C) and (B – D)
• Min (A – C) is associated with Min (B – D) and Max (A – C) with Max (B – D).
• The nomenclature of all Harmonic Patterns are based on this “if-than” relationship.
E.g. – In Crab Pattern
if A-C is 0.382 then C-D would be 2.24 and
if A-C is 0.886 then C-D would be 3.618.
Hope above will help you to resolve your query. If need to understand more deep and wide, feel free to get in touch.