At this 2.5hr FREE Public Learning event, Dr FOO will lecture on how to apply his "Trading Harmonics" technique to trade Forex and SGX stocks more effectively.

If you have been trading forex or SX stocks, and you want to improve your trading skill to make more money with less time, then please do not miss this event.

 

What is Harmonic Patterns Trading?

Harmonic Patterns Trading (HPT) is a methodology that uses specific price patterns and the alignment of Fibonacci ratios to determine highly probable reversal points (pull backs and or retracements) in the financial markets.

This style of trading and it's traders believe that patterns or cycles, like many patterns and cycles in life, repeat themselves.

The objective is to identify these harmonic patterns, and to enter or to exit a position based upon a high degree of probability of historic price action.

Trades are executed at a price level where the cycle is changing, and or respecting the natural ebb and flow of buying and selling. In doing so, these trades are considered to be executed “in harmony” with the market.

Harmonic Patterns Trading works on any time frame - intra-day, daily, weekly or monthly charts. But most of the experienced Harmonic Traders suggest that the clearest trade opportunities, or "set-ups," appear on daily and 4hr. charts for position or swing trades. Trading on larger time frames and using sound money management practices, it gives traders a higher probability of success.

If you are experienced enough, you can trade on one hour chart but you should expect a lower return. Harmonic Patterns Trading can be very rewarding if you manage your risk and trades properly with the right methodology.

What are Price Patterns?

In technical analysis, the distinctive formation formed by the price movements on the chart is called price patterns. I consider secrets of the ten important harmonic patterns are:

  1. A3 pattern
  2. A4 pattern
  3. X5 pattern
  4. Butterfly pattern
  5. BAT pattern
  6. Crab pattern
  7. Three Drives pattern
  8. Shark pattern
  9. Dragon pattern
  10. Seahorse pattern

Secrets of the Ten Harmonic Price Patterns

The secrets of the Ten Harmonic patterns are based on the work of R N Elliott (EWT) and H N Gartley (X5 pattern) using Fibonacci retracements and projection ratios.

The basic structure of EWT is called 12345ABC. The classic EW consists of five waves pattern called 12345, where Waves 1,3 and 5 actually effect the directional impulse movement and Waves 2 and 4 are countertrend interruptions. Following the completion of the five waves are the three corrective waves, ABC. One complete cycle would consist of eight waves (12345ABC).

The basic harmonic pattern structure is called X5. The XA leg is considered the emotional wave. This is followed by the ABC corrective phase.

X5 Pattern fits perfectly into 12345ABC structure. XA leg or swing would be labelled as Wave 1 in EWT and ABCD would be labelled as ABC Elliott correction.

When the ABC correction of the trend is completed, we expect the market to continue with the trend. This is where trading the harmonic patterns has an edge over other trading methodologies. Harmonic traders enter at the END of the ABC correction of the trend and exit at the END of the trend.

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