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Harmonic Patterns

Bat Harmonic Pattern - Advanced AnalysisIn this series of chart patterns, we have taken a look at the more traditional ones. However, we have not yet discussed harmonic patterns. Harmonic patterns form a part of the numerous chart patterns available for the identification of reversal points. The practice of trading using harmonic patterns is often defined as "Harmonic Trading". We felt like it was an appropriate time to discuss the popular bat harmonic pattern, defined as "The most accurate pattern in the entire harmonic trading arsenal" by Scott M. Carney (1). "Suspicions in thoughts are like bats among birds." - Translated from Francis Bacon. 1. Introduction Unlike most traditional chart patterns, these patterns do not require breakouts of the price to be traded and involve the usage of precise Fibonacci ratios (highlighted below) for the identification of harmonic patterns. This makes harmonic patterns less subjective and pretty spooky. Wow. 1.1 Fibonacci Ratios Fibonacci ratios are key components of harmonic patterns. Fibonacci ratios are obtained from the Fibonacci sequence, whose n th element is obtained by adding the two previous numbers of the sequence, that is: Fib(n) = Fib(n-1) + Fib(n-2) The sequence is as follows: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233..., and exhibits various characteristics. One characteristic of interest is given by the ratios between elements in the sequence. The ratio of one element in the sequence with the following one approximately equals 0.618, while the ratio of one element in the sequence with the previous one approximately equals 1.618. These two values are often defined as golden ratios, with 1.618 being denoted as "Phi" (upper-case P) and 0.618 as "phi" (lower-case p). The ratio between elements separated by two positions returns 0.382 and 2.618 respectively, calculating the ratio using a higher separation would return the series of Fibonacci ratios. These ratios are also given by raising the golden number with specific exponents. 0.618^4 = 0.146 0.618^3 = 0.236 0.618^2 = 0.382 0.618^0.5 = 0.786 0.618^0.25 = 0.886 0.618^0 = 1 The rationale behind the usage of Fibonacci ratios with harmonic patterns (and other methodologies in general) is given by the presence of the Fibonacci Sequence in nature and certain organisms and structures, but more importantly in human behavior. If security prices reflect investor behaviors, it seems logical to find a connection with Fibonacci numbers. This is a common rationale used by technical analysts to justify the usage of Fibonacci ratios. A few studies aimed to explain a potential connection between the Fibonacci sequence and financial markets and evidence obtained by Bhattacharya & Kumar provide further incisive research on this connection (2). 2. Harmonic Bat Patterns The bat harmonic pattern is built from 4 segments connecting points X, A, B, C, and D, each one located at a local maxima/minima of the price. The relative distance between the segments is used to determine the validity of a bat pattern; these rules are defined as follows: 1 - Segment AB retraces within 38.2% and 50% of the XA segment (some less strict conditions only require a retracement within 38.2% and 61.8%). 2 - Segment BC retraces within 38.2% and 88.6% of the AB segment. 3 - Segment CD retraces within 161.8% and 261.8% of the segment BC. 4 - Segment AD is approximately equal to 88.6% of segment XA. For the pattern to be valid, the vertex given by point C must be confirmed. It is also interesting to note that the bat pattern can possess an internal AB = CD pattern. A reversal is more likely to occur within the "potential reversal zone" (PRZ). Traders can have different methods for identification however Fibonacci retracements are commonly used, with an extremity of the PRZ located at 88.6% of the internal retracement of XA and another at 161.8% of BC. Another method identifies the PRZ within 78.6% and 100% of the internal retracement of XA. Some traders wait for additional confirmation before entering a position such as the occurrence of internal reversal patterns, oscillator divergences, or for the price to evolve outside the PRZ such that it implies that a reversal is occurring. 3. Stop Loss & Take Profits Various techniques exist to set take profits and stop-loss levels during the formation of a bat pattern. Some traders place the stop loss at or a few ticks below X, which can lead to reduced risk but a higher risk of a premature trigger of the stop-loss. The usage of a very tight stop loss is mentioned by Scott M. Carney. A take profit can be set at point A. Additional Fibonacci retracements might be used for partial exits. 4.Practical Examples Bearish Bat pattern on USDJPY15, we apply Fibonacci retracements to the segment XA and use the levels 0.5, 0.382, 0.236 as partial take profits while level 0 exits the entirety of a position. Bullish Bat pattern under completion on ERGOUSDT 4h, the price breaks the level situated at point B is a good sign for a potential of reach of the PRZ. 5. Observations Oscillator divergences occurring when the price is within the PRZ can be an additional confirmation of a potential reversal occurring. We found no studies proving data that the bat harmonic pattern is superior to other harmonic patterns. One study by Krzysztof Bednarz highlights the profitability of the bat pattern in a trading period of 27 days (3). Bulkowski shares statistics on how often price turns at point D (4). For Bullish Bats, the price reverses at point D 91% of the time, for Bearish Bat patterns the price reverses at point D 86% of the time. Super spooky... References (1) Carney, S. M. (2010). Harmonic Trading, Volume Two: Advanced Strategies for Profiting from the Natural Order of the Financial Markets. Pearson Education. (2) Bhattacharya, S., & Kumar, K. (2006). A computational exploration of the efficacy of Fibonacci Sequences in technical analysis and trading. Annals of Economics and Finance, 7(1), 185. (3) Bednarz, K. (2013). Taking investment decisions on the futures contracts market with the application of Bat harmonic pattern – the increased efficiency of investment. (4) Bulkowski, T. N. (2021). Encyclopedia of chart patterns. John Wiley & Sons.
BITSTAMP:BTCUSDEducation
by LuxAlgo
44
price action patterns you need to know ( part 6 ) hi my friends , i'll share with you some patterns which can help you in trading ( part 6 ) Ascending Channel Pattern is a continuation pattern appear in the pullback and after the breakout of the Channel that will be a good signal to go long again ( bull ) Descending Channel Pattern is a continuation pattern appear in the pullback and after the breakout of the Channel that will be a good signal to go short again . ( bear ) note : note : both of them ar continuation patterns . please support me with like and follow me for more ideas .
Education
by Diamond_Chart
price action patterns you need to know ( part 5 ) hi my friends , i'll share with you some patterns which can help you in trading ( part 5 ) the bull flag is a continuation pattern appear in the pullback and after the breakout of the flag that will be a good signal to go long again the bear flag is a continuation pattern appear in the pullback and after the breakout of the flag that will be a good signal to go short again . note : note : both of them ar continuation patterns . please support me with like and follow me for more ideas .
Education
by Diamond_Chart
HOW-TO: Auto Harmonic Pattern - Ultimate [Trendoscope]Thanks for watching the video. I will just highlight the key differences between Auto-Harmonic-Patterns-V2 and Auto-Harmonic-Pattern-Ultimate-Trendoscope . Most of the other information is already available in the description of the script. Please read through them and let me know if you have any questions. Key improvements on new version are: ▶ Whole pattern scanning logic is rewritten based on pine v5 feature to make it more efficient. It uses libraries and other features of pine 5 such as while loop to enhance performance of the scanning ▶ Zigzags - not using multi level zigzags as we found it to be inconsistent and often buggy - specially for harmonic patterns. ▶ Wait for confirmation flag is removed permanently. @CryptoArch_ has convinced me that we should not use this for harmonic patterns ▶ Search depth - Higher search depth and vairable search depth based on zigzag ▶ Optimized target and trailing based on each individual patterns ▶ More options for enabling/disabling patterns ▶ Support and resistence information and ability to use it for pattern filtering ▶ Improved stats for open and closed trades
COINBASE:ETHUSDEducation
by Trendoscope
29
Why Risk Management is so important ? (read)Hello traders, I'm making this post in order to help the community, most of you focus to much in technical analysis but let's take back to basics a put things clear. Before continuing reading make sure to give a like this will help the community use proper risk management. Okay let's begin. For every trade that you take, there is a certain scenario playing out. The moment that you clicked, for that moment of time, there were a certain number of market participants buying a certain amount and there were a certain number of market participants selling . Do you believe that the same participants transacting when you clicked for one trade, are the same market participants transacting when you clicked for another trade? Absolutely not; it is an impossibility. Every moment there exists market participants entering and exiting , anything can happen. Now let's talk about simple math : This is simply a conceptual series of 10 trades, taken one after the other from a beginner perspective let's us act as a beginner: if at the beginning you risk more than expected then it will take you a lot of work to recover from that DD%. Make sure to have a proper risk modelling and follow the rules to survive. New traders execute trades with certainties '' this loos good , I will risk more'' . ''I will risk more in this one because I need to recover my previous loss'' . ''I lost the previous one i will risk less'' Here is where the problem occurs: When you modify parameters in your risk modeling it will have a strong impact in the outcome. what happen in you risk 3 % in the 5 first trades and you end up losing ? you will end up in serious problems. What if you risk 2 in the first trades and you end up losing and then you say ok I will risk less because I'm losing to much and that trade end up making a 1 to 6 risk reward ratio.Hope this example was clear. Now Let us say for example that you took 10 trades with proper risk management ? the outcome is totally different. As you can see , we risk the same amount every time and we only need few trades to make decent profits. Proper risk modelling will allow you to have losing trades and still making profit. you can have a poor win rate like in this example and still end up positive. The only difference between the first trader and the second one is that in fact one has a trade by trade approach and the second has a series per trade approach. This might be hard to understand but if you really want to continue in the long you must use a proper risk modelling system. Here is where the solution is : EVERY TRADE IS UNIQUE , ANYTHING CAN HAPPEN. MANAGE YOUR EXPOSURE OR YOU WILL HAVE NOTHING LEFT TO MANAGE. PRO traders understand that in order to have results they must adopt a series per trade approach Please do follow and comment your thoughts. let me know in the comment section what do you think about it .
BITSTAMP:BTCUSDEducation
by AIRFOREXONE_
10
Trading Chaos By Bill Williams | Part 1Hello, everyone! Today we gonna start the series of articles about the "Trading Chaos" by Bill Williams(BW) . He has the unusual theory abut how the markets play out. After this concept learning I am going to trade with his techniques and test this trading method. Please, subscribe and give us a like if you are interested in studying Trading Chaos. If you are familiar with this theory and used it in practice, please, write your opinion about it in the comment section. Let's start! In the first chapter BW explains why the most of traders are in the wrong side of the market. There are a lot of strategies which use the linear method for the market price predicting, but the market is not a linear system, because it formed by the human behavior, which was born from chaos. The fractal geometry approximates the chaos in our world and, in particular, on the market. The fractal is the element of chaos and we will study how to identify and use it on the market in the next chapters. What you need to know now? 1.Classical technical analysis does not work because of the linear approach which it use. 2.Mechanical trading systems which provides the automatic trading does not work too with the same reason. 3.Market is the child of chaos and we need nonlinear methods, which we will consider in the next parts. DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
Education
by Skyrexio
Harmonics tutorial. The Bearish Gartley.Harmonics are beautiful things. But what are they? Harmonics are repeating patterns that can be found in markets all across all markets. They represent repeat patterns of human psychology. The gartley is one of the most reliable harmonics that there is. The gartley harmonic starts at X. The first impulse location is referred to as A. It typically does a 618 retrace to make the B. Then it retrace back towards a again; somewhere between 382 and 886 of a retrace of the A-B impulse. This is the C. The final move is approximately a 786 retrace of the macro structure usually near a candle close and not always exactly at the 786 line. Just very near it. This last location is the D. X to A to B to C to D. Bitcoin has just created and xabcd bearish gartley. We are at the arrow on the right side right now. We just rejected at the candle close arrow you can see on the left side of the screen. So... Does the bearish gartley play out? Time will tell. You must look for coinciding variables. There is bearish divergence on the 3day chart right now on multiple oscillators. I'm inclined to say we are in a bearish gartley right now. Good luck bulls.
COINBASE:BTCUSDEducation
by UnknownUnicorn4285265
1
My Favorite Trading StrategyToday I go over my favorite trading strategy that I use every day in the market. I go in detail exactly how I trade this strategy with two examples. I hope you guys enjoyed this video and I hope you can use it to make you some money. I challenge you guys to back test it and try it on your own trades. Here are some rules/notes that I use while trading this strategy. Strategy rules/notes: - 5 minute chart - liquidated options on the stock - stop loss at the high/low of the first candle - only use on stocks with high volume - the moves on these stocks usually last until 7-9am (west coast time) - make sure 2/1 or 3/1 risk to reward is in place - you must only win 34/100 trades to be profitable with 1/2 risk to reward I hope this strategy treats you guys well. Have great rest of the weekend and make sure to leave a comment with suggestions or requests for other videos. Thanks!!
NASDAQ:MSFTEducation
by MindOverMarket
9
Fourier: Interpreting and Over-interpreting Frequency AnalysisGreetings to all! In this post, I'd like to share some thoughts on frequency analysis based on Fourier transform. This mathematical method breaks down data into cyclical constituents (frequency components). Then the importance of each frequency component in the original data is expressed as the square of its amplitude, that is, power . Some time ago I published a Pine Script implementation of the Fast Fourier Transform (FFT) algorithm. I made it specially designed to be used for filtering data based on its frequency content. The concept of FFT filtering is well known and quite simple (for detail, see the link to my script below). When it comes to frequency analysis , that's a whole different story. Using the power versus FFT frequency plot (i.e., the spectrum ) to study the data is an extremely popular analytical technique in science and technology. But with financial data, it is tougher than it sounds. When dealing with noisy, non-stationary and overall uncertain price data, the FFT never works as well as it does in math textbooks. Here, to illustrate the capabilities, limitations, and some myths of frequency analysis, I generated artificial price data, applied an FFT to each price column, and plotted a power spectrum as a function of time (i.e. a spectrogram ). The spectrogram shows frequency information along the vertical axis. The lowest frequency content is displayed at the bottom, the highest frequency content is displayed at the top. Frequencies are given as the number of cycles per sample size (256 bars in the above chart). Power levels are defined by the color map shown to the right. As for the generated data, it is basically a random walk with a few non-random constituents added at given time intervals (sinusoidal functions and a gap). Now let's discuss a few aspects seen in the chart: 1. True periodicity Starting on a high note, if there is real oscillatory behavior in the data (see the green and red areas in the above chart), the FFT can reveal this quite well. The problem is that the frequency resolution is heavily influenced by the sample size. For example, with a sample size of 64 price bars, it is impossible to resolve cycles longer than, you guessed it, 64 bars. It should also be noted that the ideal deterministic sinusoidal functions shown in the above chart can never be found in real market data. 2. Discontinuities If there is a gap, it's bad. Gaps, that is, discontinuities in the data, are prominent features that have broad and smooth frequency spectra that can overshadow other features. If you google "Fourier transform of a step function", you can see what I mean. Thus, if a gap occurs somewhere within the sample window, the Fourier spectrum is unlikely to be reliable. 3. Random walk This is not surprising, but even purely random data can produce rich frequency content. It is even difficult to tell from the spectrogram where the purely-random area changes into the one containg a sinusoid. (Well, if we accept the random walk theory of markets, the last comment does not make much sense. But here we are talking about syncretic data). The situation, however, becomes much more fun if we analyze the change in data per bar (i.e., data - data ), rather than the actual data. In the case of a random walk, these changes are purely ... well, random. And it is known from textbooks that the Fourier spectrum of random noise contains only noise. However, in areas containing sine, there is an order in the data. In other words, the data is autocorrelated. As a result, the FFT spectra of the data reveal the corresponding frequency components way above the noise level. In this sense, Fourier analysis may seem as a potential tool to to test market efficiency. (There is even a Fourier-based version of the Dickey-Fuller test for stationarity of time series, but that is a different story.) However, I am not aware if it can somehow outperform the more commonly used tests. Conclusion In the context of financial time series, the Fourier transform is often associated with the estimation of marked cycles. I think that's why it has become one of the most polarizing technical tools out there. While it is certainly a powerful math tool, it is helpful to know its limitations. Can one capitalize on the revealed qualitative information about the "cycle" periods? Regardless of how to think about the concept of market cycles, I don't think so. But could the Fourier transform be potentially useful in general for analyzing price data? Definitely yes! See below for how to use FFT to filter data:
AMEX:SPYEducation
by tbtkg
27
H&S Pattern can be either horizontal or sloping up/down neckline ( """ The pattern consists of a head (the second and the highest peak) and 2 shoulders (lower peaks) and a neckline (the line which connects the lowest points of the two troughs and represents a support level). The neckline may be either horizontal or sloping up/down. The signal is more reliable when the slope is down rather than up. The pattern is confirmed when the prices broke below the neckline after forming the second shoulder. Once it happens, the currency pair should start a downtrend. So, a sell order is put below the neckline. To get the target measure the distance between the highest point of the head and the neckline. This distance is approximately how far the price will move after it breaks the neckline. source FBS
SP:SPXEducation
by samitrading
4
Education excerpt: Classic Chart FormationsIntroduction The part of technical analysis studies chart patterns. Rationale behind this practice is that chart patterns have fractal nature which represents ability of a trend to act similarly over different time periods. Chart patterns are basically configuration of price that is bounded above and below. Boundaries are commonly derived either from a line or a curve. Lines, for example, can be represented by simple horizontal lines or trend lines. Curve, on the other hand, is rather reminiscent of an arc or a bow in its shape. Boundaries in chart patterns can often act as support or resistance. All chart patterns have their development stages. There is first stage which describes the trend preceding the formation and then there is second stage which usually triggers the signal for action. In the first stage of pattern formation analyst merely observes price action and waits for signal to be triggered. This stage can also be called setup. The second stage then begins with signal being triggered. Trigger can, for example, come in a form of a crossover (by indicator, price, etc.) or breakout. In this stage analyst takes action and either enters or exits the market. Entry can be placed from above or from below. Similarly, exit can be downward or upward. The variables of entries and exits are statistically important because some combinations of entries and exits tend to produce better results than other combinations of entries and exits. The chart patterns can be subdivided in two groups: continuation patterns and reversal patterns. Continuation patterns are associated with continuation of trend that was present prior to the formation of a continuation pattern. On the other hand, reversal patterns are associated with reversal of trend that was in place prior to the formation of a reversal pattern. Double Top and Double Bottom Double top and double bottom formation is very simple pattern that is well known to many professional and retail traders. It consists of three reversal points. For double top these reversal points are: two peaks and one trough. Opposite to that, for double bottom formation reversal points are: two troughs and one peak. Price enters double top formation from below and double bottom formation from above. Peaks in double top and troughs in double bottom should not be apart from each other’s price level more than 5%. Double top and double bottom normally forms over two to six weeks. If formation takes longer then it starts becoming less reliable. Double top is valid only when point separating two peaks was penetrated. Similarly, double bottom is valid only when point isolating two troughs was penetrated. Illustration 1.01 Picture above depicts graph of General Motors stock on daily timeframe. It is observable that price touched resistance line twice before reversing to the downside. Rectangle Rectangle is simple pattern that is bound by two horizontal lines that are parallel to each other. These lines acting as boundaries are called: support and resistance. Each boundary must also be a trend line. That means it must touch approximately same price reversal level at least twice. This particular requirement is what separates it from a double bottom or a double top formation. Price tends to oscillate between two bounds in the rectangle pattern. Then trigger comes in a form of breakout above resistance or below support. Illustration 1.02 Picture above depicts graph of Pepsico stock on daily timeframe. It is observable that price action is sideways in this example. Price oscillates between resistance and support lines with occasional false breakouts below support. Triple Top and Triple Bottom The triple top and bottom pattern is bounded by horizontal line similarly like double top and bottom formation. However, this pattern differs from double formation in that it has three touches to the support or resistance line instead of just two touches. Triple top and bottom tends to occur with lower frequency in comparison to the rectangle and double formation. In triple top each peak should be roughly at the same level and each peak should have similar shape. Confirmation for triple top comes once troughs are penetrated to the upside. Triple bottom is basically mirror image of triple top and confirmation comes once breakout above peaks takes place. Pullbacks are very common for this formation and they tend to reduce breakout potential. Standard Triangle Triangle pattern is bounded by two lines that are crossing each other when they are extended to the future. Triangle pattern has its base and apex. Point of collision between two lines is called apex while base is basically a distance between the first high reversal point and the first low reversal point within triangle pattern. This pattern should consist of least two touches to the support line and another two touches to the resistance line. Standard triangle can be either symmetrical or ascending, or descending. Symmetrical triangle is considered to be continuation pattern while ascending and descending triangle is mostly regarded as reversal pattern. In symmetrical triangle both boundaries are at slope. In ascending triangle only lower bound is at slope while upper bound is horizontal. Contrary to that, in descending triangle upper boundary is at slope and lower bound is horizontal. These patterns are validated once breakout above or below boundary takes place. Another form of confirmation comes when breakout from an apex of triangle occurs. Illustration 1.03 Picture above shows daily graph of TSLA stock. Formation of symmetrical triangle is observable. Diamond top Diamond top formation is rare broadening pattern that is very difficult to observe. It combines two triangles and can be imagined as mirror image of triangle pattern followed by triangle pattern. Price range increases and then decreases throughout this formation. Wedge A wedge pattern is simply a triangle pattern with both trend lines being at slope and pointing to the same direction. There are two types of wedges: a rising wedge and a declining wedge. A rising wedge consists of trend lines that point upwards while declining wedge contains trend lines that point downwards. Illustration 1.04 Illustration above shows daily graph of DAL stock. It is visible that confirmation came after breakout above upper bound. After that price continued to rise. This pattern is very bullish once confirmation occurs. Rounding Top and Rounding Bottom Rounding top and bottom patterns are longer term formations that are bounded rather by an arc than horizontal line. Rounding of the pattern usually spans over long time and it tends to contain short term trends within its formation. Another interchangeable name for these formations is: saucer or bowl, or cup. There is also variation of this pattern that develops over shorter period of time and it is called scallop. Volume in rounding top tends to gradually increase as price increases towards the peak of the formation. Then it tends to fall as price decreases from the peak. Similarly, in rounding bottom volume tends to decrease as price is approaching a low. After that volume tends to increase as price starts to rise from a low. Head and shoulders Head and shoulder pattern is one of the most famous chart patterns with statistical significance and very high profitability. It is complex pattern that combines trend lines, support or resistance lines, and rounding. Head and shoulders pattern is normally preceded by uptrend while inverted head and shoulder formation is preceded by downtrend. This pattern is considered to be reversal pattern where head and shoulders is topping formation and inverted head and shoulders is bottoming formation. Pattern's structure consists of head, shoulders and neckline. Head is either high in topping formation or low in the bottoming formation. Neckline in topping pattern is simply trend line which connects two troughs that separate head and shoulders. In bottoming formation neckline connects two peaks that separate head and shoulders. Illustration 1.05 Picture above shows daily graph of Pepsico stock. Inverted head and shoulders pattern is obsrvable bottoming head and shoulder pattern is formed by three troughs. The second trough must belower than the first and the third trough. The first trough is called left shoulder and third trough is called right shoulder. Middle trough is called head. Shoulders do not have to be the same height. Because of that neckline can be at slope in head and shoulder formation. Confirmation in this pattern comes once neckline is penetrated. Disclaimer: This content is just an excerpt from full document that will be available later with full range of illustrations and more detail. Purpose of this content is education.
NYSE:DALEducation
by Tradersweekly
8
price action patterns you need to know ( part 1 ) Hi friends i'll share with you some price action patterns you should know . I don't like posting a picture with 100 patterns . I would like to post this in steps so that you can understand more and make things clear . 1- ascending triangle generally happens in an uptrend and is a bullish pattern , you can set your order after the breakout of the horizontal line with a good volume candle . - descending Triangle Pattern is the exact opposite of the ascending triangle pattern. It is a bearish continuation pattern indicating that the prior downtrend will continue and you set your order after the brakout of horizontal line with a good volume candle . please support me with like and follow me for more ideas and tell me what do you think about that
Education
by Diamond_Chart
Classic Chart Patterns That You Need To KnowHello everyone, as we all know the market action discounts everything :) _________________________________Make sure to Like and Follow if you like the idea_________________________________ In today’s video, we are going to learn the Classic reversal and continuation chart patterns, How to identify them and when to enter a trade, and how to use stop loss and take profit with these patterns. These patterns can be found in candlestick, bar and line charts. Anyone who is interested in analyzing any market and trading in general should know these so if u don’t know them have no worries after you watch this video you will. NOTE: you should always wait for confirmation when trading with these patterns. Confirmation in all of them is breaking the pattern and the market closing above or below it. Chart Patterns are divided into 2 categories : Reversal Patterns : They indicate a high probability that the existing trend has come to an end and that there is good chance of the trend reversing direction. Continuation Patterns : They indicate a high probability that the existing trend is still active and that there is a good chance of the trend continuing in the same direction. There are 2 types of these patterns : Bearish : it means that the market is going down. Bullish : It means that the market is going up Let's Start with the Bearish Reversal Patterns : 1) Double Top (75.01%) : The double top is one of the most common reversal price patterns. The double top is defined by two nearly equal highs with some space between the touches, The pattern is complete when price breaks below the swing low point created after the first high. The pattern is considered a success when price covers the same distance following the breakout as the distance from the double high to the recent swing low point 2) Triple Top (79.33%) : The triple top is defined by three nearly equal highs with some space between the touches, The pattern is complete when price breaks below the swing low points created between the highs. The pattern is considered a success when price covers the same distance after the breakout as the distance from the triple high to the furthest swing low point 3) Head and Shoulder (83.04%) : The head and shoulders patterns are statistically the most accurate of the price action patterns. The regular head and shoulders pattern is defined by two swing highs (the shoulders) with a higher high (the head) between them. The two outer swing highs/lows don't have to be at the same price, but the closer they are to the same area the stronger the pattern generally becomes. The pattern is complete when price breaks through the "neckline" created by the two swing low points. 4) Rising Wedge (73.03%) : A wedge pattern represents a tightening price movement between the support and resistance lines. the price is hypothesized to break through the support. This means the wedge is a reversal pattern as the breakout is opposite to the general trend. Rising Wedge serves as a reversal if appeared during an uptrend . Now let's Talk about the Bullish Reversal Chart patterns : 1) Double Bottom (78.55%) : The double bottom is one of the most common reversal price patterns. The double bottom is created from two nearly equal lows, The pattern is complete when price breaks above the swing high point created by the first low. The pattern is considered a success when price covers the same distance following the breakout as the distance from the double low to the recent swing high. 2) Triple Bottom (79.33%) : he triple bottom is another variation of reversal price patterns. the triple bottom is created from three nearly equal lows, The pattern is complete when price breaks above the swing high points created between the lows. The pattern is considered a success when price covers the same distance after the breakout as the distance from the triple low to furthest swing high. 3) Inverted Head and Shoulder (83.44%) : The head and shoulders patterns are statistically the most accurate of the price action patterns, The inverted head and shoulders pattern has two swing lows with a lower low between them. The two outer swing lows don't have to be at the same price, but the closer they are to the same area the stronger the pattern generally becomes. The pattern is complete when price breaks through the "neckline" created by the two swing high points . 4) Falling Wedge (72.88%) : A wedge pattern represents a tightening price movement between the support and resistance lines. the price is hypothesized to break through the support. This means the wedge is a reversal pattern as the breakout is opposite to the general trend. Failing Wedge serves as a reversal if appeared during a downtrend Let's move on now and start talking about Bearish Continuation patterns : 1) Rising Wedge (73.03%) : The Rising Wedge in the downtrend indicates a continuation of the previous trend. It is formed when the prices are making Higher Highs and Higher Lows compared to the previous price movements. 2) Bearish Flag (67.72%) : The flag is a continuation pattern that can occur after a strong trending move. It consists of a strong bearish trending move followed by a rapid series of higher lows and higher highs, These patterns are small hesitations in strong trends. The flag pattern appears as a small rectangle that is usually tilted against the prevailing trend in price. The best flag patterns have two features: 1) a very strong run in price (near vertical) prior to the setting up of the flag and 2) a tight flag that occurs right on the upper (or lower) edge of that run. This pattern is considered successful when it breaks the lower trendline and then proceeds to cover the same distance as the prior trending move starting from the outer edge of the pattern. 3) Bearish Pennant (55.19%) : The pennant often occurs in high momentum markets after a strong trending move, but the tight price formation that occurs can lead to breakouts against the preceding trend almost as often as we get continuation. The slight difference in the price pattern formation between flags and pennants is an important distinction that can make a big difference in your trading results so it's well worth being aware of while watching the market develop during your trading day. 4) Descending Triangle (72.93%) : The triangle pattern usually occurs in trends and acts as a continuation pattern. It's defined by a bearish trending move followed by two or more equal lows with a series of lower highs. The pattern is complete when price breaks below the horizontal support area and the pattern is considered successful if price extends beyond the breakout point for at least the same distance as the pattern width And finally we have the Bullish Continuation patterns : 1) Falling Wedge (72.88%) : The Falling Wedge in the downtrend indicates a continuation of the previous trend. It is formed when the prices are making lower Highs and lower Lows compared to the previous price movements. 2) Bullish Flag (67.13%) : The flag is a continuation pattern that can occur after a strong trending move. It consists of a strong bullish trending move followed by a rapid series of lower highs and lower lows, These patterns are small hesitations in strong trends. The flag pattern appears as a small rectangle that is usually tilted against the prevailing trend in price. The best flag patterns have two features: 1) a very strong run in price (near vertical) prior to the setting up of the flag and 2) a tight flag that occurs right on the upper (or lower) edge of that run. This pattern is considered successful when it breaks the upper trendline and then proceeds to cover the same distance as the prior trending move starting from the outer edge of the pattern. 3) Bullish Pennant (54.87%) : The pennant often occurs in high momentum markets after a strong trending move, but the tight price formation that occurs can lead to breakouts against the preceding trend almost as often as we get continuation. The slight difference in the price pattern formation between flags and pennants is an important distinction that can make a big difference in your trading results so it's well worth being aware of while watching the market develop during your trading day. 4) Ascending Triangle (72.77%) : The triangle pattern usually occurs in trends and acts as a continuation pattern. It's defined by a bullish trending move followed by two or more equal highs and a series of higher lows The pattern is complete when price breaks above the horizontal support area and the pattern is considered successful if price extends beyond the breakout point for at least the same distance as the pattern width 5 Rules To Always Follow I hope that I was able to help you understand Classic Continuation and Reversal Patterns better and if you have any more questions don't hesitate to ask. This is not Financial Advice its a pure Educational video. Hit that like if you found this helpful and check out my other video about the Moving Average, Stochastic oscillator, The Dow Jones Theory, How To Trade Breakouts, The RSI , The MACD , The Bollinger Bands , The Different Types Of Trading Strategies, Candlestick Charts Part 1 & 2 and 3 links will be bellow
Education
by GabiDahduh
118
Candle stick every beginners should know . ( part 4 )today i'll share with you the most famous candlestick pattern everyone should know. part 4 we will start with the Rising Three Methods Pattern . It is a five candlestick pattern observed during a bullish rally and its indicates that bullishness would further continue in the market . second , Falling Three Methods Pattern It is a five candlestick pattern observed during a bearish rally. This pattern indicates that bearishness would further continue in the market. third the dark cloud cover appear in the uptrend and It indicates the possibility of a price reversal ( short ) . please support me with like and follow me for more ideas
Education
by Diamond_Chart
2
Candle stick every beginners should know . ( part 3 ) Hi friends , today i'll share with you the most famous candlestick pattern everyone should know. part 3 we will start with the morning star . this pattern appear in the downtrend and It indicates the possibility of a price reversal ( long ) second , the evening star appear in the uptrend and It indicates the possibility of a price reversal ( short ) third doji / spinning top / high wave appear in the downtrend and the uptrend and They considered as reversal candles . please support me with like and followe me for more ideas .
Education
by Diamond_Chart
4
Opening Range Breakout StrategyOpening range breakout is something that I use daily for almost all of my plays. Its very simple. If the high or the low of the first five minute bar is broken. Take an entry in the way the stoke broke. I have seen soooo much success with this strategy. There is much more that goes into it like stop losses and where to take profits. Those will all be explained in further tutorials. also this strategy is not at all a swing trade strategy, this is purely a day trade strategy that is only used in the morning as the market is opened. I challenge you guys to go through charts yourself and look for opening range breakouts. Also note this works best on the 5 minute chart. Hope you guys see as much success as I do with this very useful strategy!!!
NASDAQ:NVDAEducation
by MindOverMarket
understanding 5-0 harmonic patterns-2It can be seen that a harmonic 5-0 made in 30 min time frame which was a bullish 5-0 pattern, failing to sustain at the support .50 retracement a plunge in price action seen which was too fast like the previous example where it becomes extremely difficult to react so fast to decide except to book a loss as fast as possible. it is requested to you all who are viewing this article to view with the previous 5-0 pattern to get a clear idea about the 5-0 patterns. However I am once again mentioning the 5-0 pattern rules. What is the 5-0 harmonic pattern? Just as it is with the shark pattern, the 5-0 harmonic pattern is a relatively new pattern. Carney discovered it and wrote about this pattern in the second book in his harmonic series, ‘Harmonic Trading: Volume Two’. The 5-0 pattern is easily one of the wonkiest looking patterns. Depending on the amount of knowledge you have about harmonic patterns, the 5-0 will look different, and this is mainly because the 5-0 pattern begins a 0. If you are familiar with seeing XABCD, then 0XABCD will undoubtedly look different. The patterns are relatively new but are getting more popular lately. It stands out from the other harmonic patterns because it is meant to begin a new trend rather than discover retracement. There are two types of this pattern, bullish and bearish. The convergence zones discovered with the help of the shark pattern makes it possible for us to accurately detect the rebound but doesn’t necessarily lead to the restoration of the previous trend. On the other hand, regular rollbacks aim to determine the ability of the forces dominant on the market in the previous period (bears or bulls) to get the initiative back to their disposal. If they are not sufficient, the last reversal of the previous trend occurs, but already within another pattern – 5-0 harmonic pattern. How to identify the 5-0 pattern? The 5-0 pattern begins with either an uptrend or a downtrend which gets exhausted and draws zigzag like corrective movements. The qualities of the 5-0 pattern to look at include: AB movement has to be 1.13 to 1.618 retracement of XA. BC movement has to be 1.618 to 2.24 retracement of an AB. CD movement ought to be 0.5 retracements of BC C should be between 0.886 and 1.13 of 0X movement If the conditions are satisfied, some traders trade the last leg of CD. They entering at C with a stop below 2.24 of AB retracement and aiming at 50 percent correction of BC movement. The 5-0 harmonic pattern is traded when the price is getting to point D. The stop-loss is positioned a few ticks below/above the farthest possible D level. Unlike a lot of the other patterns, 5-0 doesn’t have specific targets because it usually begins a new trend. Here the pattern fib ratios don’t matter much. Entries might be done with a limit order or on price reversals away from point D. All entries have to be confirmed for risk/reward ratio. Entries having less risk/reward have to be taken cautiously or discarded altogether.
NSE:AUBANKEducation
by Somanathrout
2