The similarity between harmonic and basic price patterns
is that their shape and structure is the key factor to recognize and validate a specific pattern. The next price movement can thus be projected with the goal of turning these patterns into profits. However, a key difference is that harmonic patterns are defined more precisely. They are 5-point reversal structures, containing combinations of distinct and consecutive Fibonacci retracements and extensions, leaving less room for flexible interpretation.
Harmonic patterns continuously repeat themselves, especially in consolidating markets. There are 2 types of patterns: 5-point retracement structures like the Gartley pattern and the Bat pattern and 5-point extension patterns like the Butterfly and the Crab. Trading harmonic patterns requires patience because, due to the specificity of the ratios, patterns that appear harmonic may not be if they don't align with the proper measurements.