Types of Harmonic Patterns and How to Trade Them

Welcome to the second part of these series, like I said on my last post we’re going to learn how to identify this patterns easily. First off, types of harmonic that occurs virtually every trading day and one thing I love about this patterns is that they can be traded as both reversal and trend trading….so below are the types patterns:

1. Alternate Bat Pattern

2. Bat Pattern

3. Gartley Pattern

4. Crab Pattern

5. Deep Crab Pattern

6. Butterfly Pattern

Before I start explaining the aforementioned patterns, let paint a picture using a bearish trade setup scenario with the below screenshot on how to identify this patterns easily… follow the steps below:

Step 1:

You need to look for a major swing or move, on the screen below we have a swing, which is the first leg, so I’ve labeled it as XA

Step 2:

We look for minor swing or retracement within the XA leg, on the screen below we have a retracement within the XA leg, so I labeled it the B point or AB leg

Step 3:

We look for another minor retracement within AB leg, see the image below, I have labeled it the C point or BC leg.

 Step 4:

Final step in identifying the pattern, we look for another bigger swing within the XA leg, I have labeled this as the D point or CD leg.

There you have guys; you can see how simple it is in identifying patterns. That is the process we’re going to use in finding this patterns as you read along and when all points are connected we have a completed pattern.

Note: All the patterns I have mentioned have same formation, but what differs one from the other is the Fibonacci retracement and extension/projection levels.

Next post we shall start with identifying “The Alternate Bat pattern” .Use the comment box below to express yourself or ask any question.