InvestorQ : Harmonic pattern screener available? like butterfly Patten etc....
Lakshmanan Margabandu made post

Harmonic pattern screener available? like butterfly Patten etc....

Nikita Damle answered.
3 years ago

Harmonic patterns are a very precise and mathematical approach to trading. Unlike basic chart based technicals, the harmonic patterns are more specific in terms of relationship ratios.

What harmonic trading does is to combine patterns and math into a trading method that is precise and it is based on the premise that patterns repeat themselves.

At the root of the methodology is the primary ratio, or some derivative of it (0.618 or 1.618), which is also the basis of the Fibonacci sequence.

Complementing ratios include: 0.382, 0.50, 1.41, 2.0, 2.24, 2.618, 3.14 and 3.618. The primary ratio is a normal pattern that is found in almost all natural and environmental structures Harmonic patterns focus on finding patterns of varying lengths and magnitudes.

Subsequently, the trader can apply Fibonacci ratios to the patterns to predict future movements.

The big challenge with harmonic price patterns is that they are a little too precise and are only applicable when the pattern shows movements of a particular magnitude A trader may often see a pattern that looks like a harmonic pattern, but the Fibonacci levels will not align in the pattern rendering the pattern unreliable in terms of the harmonic approach.

In fact, harmonic patterns can gauge how long current moves will last, but they can also be used to isolate reversal points, which is one of the most important applications of harmonic patterns in trading.

Common harmonic patterns

While there are a series of subpatterns and some even claim there are up to 7 unique harmonic patterns, for practical purposes it is mostly sufficient to understand these 4 principal patterns. You need to really grasp these four patterns very closely.

1. The Gartley Pattern

2. The Butterfly Pattern

3. The Bat Pattern

4. The Crab Pattern

You can go through the following books and they are available in any online store:

a. The Ultimate Harmonic Pattern Strategy Book (by Casey Stubbs)

b. Harmonic Trading Strategy: Guide to 4 most important patterns (by Roberto Borelli)

c. Harmonic Trading: Profiting from the natural order (by Scott Carney)