Harmonic Patterns
5-0 pattern. Bearish + 20% and bullish model + 51% Real tradingI must say almost all of this movement I took. Short + 8% (instead of 20%). At long + 55%, entry into the long was lower than shown in this example. I will attach the trading idea for which I worked below. She was published here on January 22. I used other methods of analysis and work, but I used this method that I want to talk about as evidence for my methods. The graph shows a bearish pattern , which immediately turns into a bullish 5-0 pattern, a very rare phenomenon. And that's why I decided to make this idea of training.
I want to say that the 5-0 harmonious pattern is very widely used in other markets, rarely in the cryptocurrency, due to the very low professional preparedness of the participants in this market.
Trading in this pattern can be either profitable or unprofitable, in the first place it depends not on the method itself, but on the person who uses this method. The 5-0 pattern is effective in areas of potential trend reversal. Just the pair ETH / BTC was in such a zone.
The profitability of trade largely depends not on the method of trading, but on the ability to use it.
________________________________________
A bit of history.
Harmonic patterns are the development of the idea of ordinary geometric patterns, using Fibonacci levels to more accurately determine pivot points . By the way, I almost never use the Fibonacci levels, as I see without them, what they show. For beginners in trading, it is better to use them.
By the way, who did not know initially in the father of harmonious trading Harold Gartley there were no Fibonacci levels. Only more than 80 years after the creation of the theory and the successful application of Larry Pesavento in practice, did Scott Kearney begin to pervert and sculpt exact numbers for each pattern that are far from real application on the market. It’s not customary to talk about this, but their main business is not real trading, but selling books, unlike Harold Gartley , who was a successful trader in the 20-30s during the Great Depression and became a millionaire! This is not an imaginary millionaire trader, a seller of courses and books, but a real trader who made all his fortune on real trading.
In mid-1935, Harold published his best work and the first book, which, translated into Russian, was called "Profit in the Stock Market."
The initial circulation of this book totaled only 1,000 copies. This book was very popular among traders, despite its very high cost. The book was worth 1,500 dollars, at that time it was possible to buy three new Ford cars for this amount. This is many times higher than $ 1,500 nowadays. One fact is that his books, which were being sold at the height of the Great Depression, let us understand how high authority he enjoyed among the people of the world of finance. The name of the pattern is Gartley Butterfly , which bears the name of its discoverer.
Already after the death of Harold, Billy Jones bought from Harold Gartley's wife the patent rights to the book “Profit in the Stock Market”, then continued to print it in large volumes. And a "perverse improvement" in working methods for making money on book sales started. That's why I have such a negative attitude towards such "specialists."
You have to be, not seem to be.
________________________________________________
5-0 pattern.
Pattern 5-0 is the youngest harmonious model (it is a variation of it with the Fibonacci grid thanks to traders of books on TA). The model usually represents the first pullback of a significant reversal trend. This is a relatively new model with 4 segments and specific Fibonacci measurements of each point in its structure, which excludes the possibility of a flexible interpretation.
Formation of the figure begins with a slight movement of the market, in the direction of a previously existing trend (segment AB), which was preceded by a comparable depth correction (XA). Point B, in this case, should not be higher than the level of 161.8% of point X. This is a fundamental point. If point B "goes" higher, then almost certainly the trader is dealing with short-term correction and the continuation of the existing trend.
The segment of the aircraft, in relation to the segment AB, is formed in the range between 161.8% and 224%.
The CD segment is a correction within the framework of an emerging trend. The correction depth (according to the classical pattern algorithm) should be 50% of the BC segment.
5-0 pattern template measurements:
The segment AB should be from 1,130 - 1,618. before the XA extension.
The segment BC should be a continuation of the segment AB from 1.618 to 2.240.
Point D should be formed at the level of 0.5 segment BC .
The segment AB must be equal to the segment CD, (AB = CD).
_______________________________________________
There are bullish and bearish formations of this pattern on the market. The graph shows both variants of the 5-0 pattern.
Bullish 5-0 pattern.
As you can see, the structure of the price movement at the time of the formation of the 5-0 pattern is generally very similar to the model of the Dragon figure with the development of goals. I made the ideas of training on this model of a figure and will fix it in ideas under the article.
Point 0 - the beginning of the downward movement, point X - the first correction upward, point A - the completion of the correction and the beginning of the fall down, point B - the end of the fall and the beginning of the strong upward movement, should be located at a level between 1.13-1.618 from XA, that the point C - the completion of a strong upward movement should be located between 1.618-2.24 from AB, point D is the end of the fall and the beginning of the upward movement, here we are trying to enter the market. The input should be at the level of 50% correction from the BC .
Bearish 5-0 pattern.
The structure of the bearish model of the 5-0 pattern is remotely similar to the model of an asymmetric head and shoulders or an inverted Dragon figure with a working out target.
Point O is the beginning of growth and the beginning of the formation of the model, point X is the beginning of correction down, point A is the beginning of growth and completion of correction, point B is the end of growth, should be located at the Fibonacci projection level between levels 1.13-1.618, point C is the end of a strong fall and the beginning of growth, point D - completion of growth, the place where we should open a deal for sale should be at the level of 50% correction from the BC .
Conservative traders are looking for additional confirmation before entering the trade. The 5-0 pattern can be either bullish or bearish . Goals can be set at the discretion of the trader, as the pivot point may be the beginning of a new trend. The common stop loss levels lie beyond the structure level beyond point D or the next important level for the Fibonacci sequence.
_______________________________________
Objectives for this pattern.
As it is a reversal pattern, which can act as a reversal pattern of the whole trend (the emergence of a new trend). You understand that there can be no clear goals, unlike simple figures. If you really get to the beginning of a new trend, the goals can be huge. It is important here not to exit the market prematurely. So that your profit does not turn into a loss, use the movement of stop-loss as the upward movement develops, but take into account the volatility of the instrument.
In this example, on the chart on the ETH / BTC pair, you can clearly see what the goals for this pattern can be.
The bearish model made a profit of + 20%
Channel support stopped a further drop in prices.
The bullish model made a profit of + 51%
The first goal is the resistance of the rising channel + 18%, as we see the price there was delayed for some time.
From this zone the reverse corrective movement to the support of the channel could take place. But, the price has successfully overcome this zone.
In total, the profit is + 51% of the entry point (point D).
In two models, the profit in theory was + 20 + 51% = + 70%.
But the reality is different, I have a profit of + 8% + 55% = + 60%
I rounded the interest for a better understanding, I will say one thing, there was no liquidity at the maximum to reset a significant position, and therefore the profit is much less than the theoretical one on the schedule.
______________________________________
Violations of the pattern 5-0 .
More than any other pattern, the 5-0 structure presents a unique opportunity for decision making when the area of opening positions breaks through. In all 5-0 models, the best moment to enter depends on various ratios within the structure. When trying to make a deal while forming an unsuccessful 5-0 pattern, the trader still needs to look at the prevailing trend and at models at smaller time intervals.
Of course, the 5-0 pattern is not an ultra-precise model, and it may not work out even in the most correct situations on the market. What to do if the price has broken through all levels and left the channel, in such cases, the authors of harmonious trading offer quality ideas for opening positions. The first target in this case may be the area of correction 0.886 from the entire movement. Therefore, if prices fell outside the channel and broke through the 50% area, then we should expect continued decline.
______________________________________
Advantages and disadvantages of pattern 5.0
Despite the popularity of this pattern, I would like to first consider the disadvantages of the pattern. The main of its shortcomings should be called the poor "recognition" of the figure. After all, not all formations in the real market, exactly correspond to the ideal book example. In this example, I used exactly the ideal option for the ease of presenting information, and a person who is interested in adding this pattern to his arsenal of trading can also look for more complex formations for work. I would advise beginners to look for ideal models for work, as they are more predictable.
The developers and "popularizers" of the pattern emphasize its versatility. In their opinion, the pattern works with equal efficiency on any trading instruments and at any time intervals. If in the first part this statement is undeniable, then with regard to timeframes, the use of the pattern raises many questions.
On short timeframes, this pattern is not effective due to the high content of "white noise" and which does not allow to clearly identify and build the boundaries of the pattern.
Over long periods of time, the created corridor is so wide that, in fact, it can only indicate the direction of the trend (and even then in the long term). Thus, the efficiency of using this figure very much depends on the correctly selected timeframe. The ideal timeframe for work is 4 hours-1 day.
Remember the most important thing, this 5-0 pattern is effective in areas of potential trend reversal.
_____________________________________
I wrote above that I will attach trading ideas for this pair that I worked on.
Which trading ideas made it possible to take profits in shorts + 8% and long + 55%.
1) This one worked in short when the head and shoulders formed. Published November 24th.
ETH / BTC Pivot Points . Ascending Triangle - Head and Shoulders
Result in short + 8%
2) The trading idea for which he worked in long. Published January 22.
ETH / BTC Coin operation. Reversal zones. Double bottom .
The result is now + 55%, the entrance was practically at the very minimum price when confirming support.
Perhaps we will see a reversal of the main trend by ETH18, if the price closes above the downtrend line (red line).
Also, in the idea of training on this graph, you probably all noticed which figure is being formed and how much you can earn from fulfilling its target.
Remember, trading is a game of probabilities.
Who trades from the situation created in the market - earns.
Who trades on the basis of what he wants - receives a loss.
The crowd trades out of their desires, not market probabilities. The crowd always loses.
From the pixels of thinking of individuals, a way of thinking of the crowd is created.
Thanks to the thinking and desires of the crowd, we earn.
The more stupid a society is, the higher the percentage of earnings in it is smart.
To earn, you need someone to lose money. No other way.
Under the article, I have fixed 31 learning ideas.
I didn’t even know that I already have so many of them.
Knowledge and experience are power!!!
5-0 pattern. Bearish + 20% and bullish model + 51% Real tradingI must say almost all of this movement I took. Short + 8% (instead of 20%). At long + 55%, entry into the long was lower than shown in this example. I will attach the trading idea for which I worked below. She was published here on January 22. I used other methods of analysis and work, but I used this method that I want to talk about as evidence for my methods. The graph shows a bearish pattern, which immediately turns into a bullish 5-0 pattern, a very rare phenomenon. And that's why I decided to make this idea of training.
I want to say that the 5-0 harmonious pattern is very widely used in other markets, rarely in the cryptocurrency, due to the very low professional preparedness of the participants in this market.
Trading in this pattern can be either profitable or unprofitable, in the first place it depends not on the method itself, but on the person who uses this method. The 5-0 pattern is effective in areas of potential trend reversal. Just the pair ETH / BTC was in such a zone.
The profitability of trade largely depends not on the method of trading, but on the ability to use it.
________________________________________
A bit of history.
Harmonic patterns are the development of the idea of ordinary geometric patterns, using Fibonacci levels to more accurately determine pivot points. By the way, I almost never use the Fibonacci levels, as I see without them, what they show. For beginners in trading, it is better to use them.
By the way, who did not know initially in the father of harmonious trading Harold Gartley there were no Fibonacci levels. Only more than 80 years after the creation of the theory and the successful application of Larry Pesavento in practice, did Scott Kearney begin to pervert and sculpt exact numbers for each pattern that are far from real application on the market. It’s not customary to talk about this, but their main business is not real trading, but selling books, unlike Harold Gartley, who was a successful trader in the 20-30s during the Great Depression and became a millionaire! This is not an imaginary millionaire trader, a seller of courses and books, but a real trader who made all his fortune on real trading.
In mid-1935, Harold published his best work and the first book, which, translated into Russian, was called "Profit in the Stock Market."
The initial circulation of this book totaled only 1,000 copies. This book was very popular among traders, despite its very high cost. The book was worth 1,500 dollars, at that time it was possible to buy three new Ford cars for this amount. This is many times higher than $ 1,500 nowadays. One fact is that his books, which were being sold at the height of the Great Depression, let us understand how high authority he enjoyed among the people of the world of finance. The name of the pattern is Gartley Butterfly, which bears the name of its discoverer.
Already after the death of Harold, Billy Jones bought from Harold Gartley's wife the patent rights to the book “Profit in the Stock Market”, then continued to print it in large volumes. And a "perverse improvement" in working methods for making money on book sales started. That's why I have such a negative attitude towards such "specialists."
You have to be, not seem to be.
________________________________________________
5-0 pattern.
Pattern 5-0 is the youngest harmonious model (it is a variation of it with the Fibonacci grid thanks to traders of books on TA). The model usually represents the first pullback of a significant reversal trend. This is a relatively new model with 4 segments and specific Fibonacci measurements of each point in its structure, which excludes the possibility of a flexible interpretation.
Formation of the figure begins with a slight movement of the market, in the direction of a previously existing trend (segment AB), which was preceded by a comparable depth correction (XA). Point B, in this case, should not be higher than the level of 161.8% of point X. This is a fundamental point. If point B "goes" higher, then almost certainly the trader is dealing with short-term correction and the continuation of the existing trend.
The segment of the aircraft, in relation to the segment AB, is formed in the range between 161.8% and 224%.
The CD segment is a correction within the framework of an emerging trend. The correction depth (according to the classical pattern algorithm) should be 50% of the BC segment.
5-0 pattern template measurements:
The segment AB should be from 1,130 - 1,618. before the XA extension.
The segment BC should be a continuation of the segment AB from 1.618 to 2.240.
Point D should be formed at the level of 0.5 segment BC.
The segment AB must be equal to the segment CD, (AB = CD).
_______________________________________________
There are bullish and bearish formations of this pattern on the market. The graph shows both variants of the 5-0 pattern.
Bullish 5-0 pattern.
As you can see, the structure of the price movement at the time of the formation of the 5-0 pattern is generally very similar to the model of the Dragon figure with the development of goals. I made the ideas of training on this model of a figure and will fix it in ideas under the article.
Point 0 - the beginning of the downward movement, point X - the first correction upward, point A - the completion of the correction and the beginning of the fall down, point B - the end of the fall and the beginning of the strong upward movement, should be located at a level between 1.13-1.618 from XA, that the point C - the completion of a strong upward movement should be located between 1.618-2.24 from AB, point D is the end of the fall and the beginning of the upward movement, here we are trying to enter the market. The input should be at the level of 50% correction from the BC.
Bearish 5-0 pattern.
The structure of the bearish model of the 5-0 pattern is remotely similar to the model of an asymmetric head and shoulders or an inverted Dragon figure with a working out target.
Point O is the beginning of growth and the beginning of the formation of the model, point X is the beginning of correction down, point A is the beginning of growth and completion of correction, point B is the end of growth, should be located at the Fibonacci projection level between levels 1.13-1.618, point C is the end of a strong fall and the beginning of growth, point D - completion of growth, the place where we should open a deal for sale should be at the level of 50% correction from the BC.
Conservative traders are looking for additional confirmation before entering the trade. The 5-0 pattern can be either bullish or bearish. Goals can be set at the discretion of the trader, as the pivot point may be the beginning of a new trend. The common stop loss levels lie beyond the structure level beyond point D or the next important level for the Fibonacci sequence.
_______________________________________
Objectives for this pattern.
As it is a reversal pattern, which can act as a reversal pattern of the whole trend (the emergence of a new trend). You understand that there can be no clear goals, unlike simple figures. If you really get to the beginning of a new trend, the goals can be huge. It is important here not to exit the market prematurely. So that your profit does not turn into a loss, use the movement of stop-loss as the upward movement develops, but take into account the volatility of the instrument.
In this example, on the chart on the ETH / BTC pair, you can clearly see what the goals for this pattern can be.
The bearish model made a profit of + 20%
Channel support stopped a further drop in prices.
The bullish model made a profit of + 51%
The first goal is the resistance of the rising channel + 18%, as we see the price there was delayed for some time.
From this zone the reverse corrective movement to the support of the channel could take place. But, the price has successfully overcome this zone.
In total, the profit is + 51% of the entry point (point D).
In two models, the profit in theory was + 20 + 51% = + 70%.
But the reality is different, I have a profit of + 8% + 55% = + 60%
I rounded the interest for a better understanding, I will say one thing, there was no liquidity at the maximum to reset a significant position, and therefore the profit is much less than the theoretical one on the schedule.
______________________________________
Violations of the pattern 5-0.
More than any other pattern, the 5-0 structure presents a unique opportunity for decision making when the area of opening positions breaks through. In all 5-0 models, the best moment to enter depends on various ratios within the structure. When trying to make a deal while forming an unsuccessful 5-0 pattern, the trader still needs to look at the prevailing trend and at models at smaller time intervals.
Of course, the 5-0 pattern is not an ultra-precise model, and it may not work out even in the most correct situations on the market. What to do if the price has broken through all levels and left the channel, in such cases, the authors of harmonious trading offer quality ideas for opening positions. The first target in this case may be the area of correction 0.886 from the entire movement. Therefore, if prices fell outside the channel and broke through the 50% area, then we should expect continued decline.
______________________________________
Advantages and disadvantages of pattern 5.0
Despite the popularity of this pattern, I would like to first consider the disadvantages of the pattern. The main of its shortcomings should be called the poor "recognition" of the figure. After all, not all formations in the real market, exactly correspond to the ideal book example. In this example, I used exactly the ideal option for the ease of presenting information, and a person who is interested in adding this pattern to his arsenal of trading can also look for more complex formations for work. I would advise beginners to look for ideal models for work, as they are more predictable.
The developers and "popularizers" of the pattern emphasize its versatility. In their opinion, the pattern works with equal efficiency on any trading instruments and at any time intervals. If in the first part this statement is undeniable, then with regard to timeframes, the use of the pattern raises many questions.
On short timeframes, this pattern is not effective due to the high content of "white noise" and which does not allow to clearly identify and build the boundaries of the pattern.
Over long periods of time, the created corridor is so wide that, in fact, it can only indicate the direction of the trend (and even then in the long term). Thus, the efficiency of using this figure very much depends on the correctly selected timeframe. The ideal timeframe for work is 4 hours-1 day.
Remember the most important thing, this 5-0 pattern is effective in areas of potential trend reversal.
_____________________________________
I wrote above that I will attach trading ideas for this pair that I worked on. Which trading ideas made it possible to take profits in shorts + 8% and long + 55%.
1) This one worked in short when the head and shoulders formed. Published November 24th.
ETH / BTC Pivot Points. Ascending Triangle - Head and Shoulders
Result in short + 8%
2) The trading idea for which he worked in long. Published January 22.
ETH / BTC Coin operation. Reversal zones. Double bottom.
The result is now + 55%, the entrance was practically at the very minimum price when confirming support.
Perhaps we will see a reversal of the main trend by ETH18, if the price closes above the downtrend line (red line).
Also, in the idea of training on this graph, you probably all noticed which figure is being formed and how much you can earn from fulfilling its target.
Remember, trading is a game of probabilities.
Who trades from the situation created in the market - earns.
Who trades on the basis of what he wants - receives a loss.
The crowd trades out of their desires, not market probabilities. The crowd always loses.
From the pixels of thinking of individuals, a way of thinking of the crowd is created.
Thanks to the thinking and desires of the crowd, we earn.
The more stupid a society is, the higher the percentage of earnings in it is smart.
To earn, you need someone to lose money. No other way.
Under the article, I have fixed 31 learning ideas.
I didn’t even know that I already have so many of them.
Knowledge and experience are power!!!
new highs or correction and new lows?5 wave down from b-c
higher highs on rsi
major resistance a wave 4
BTC 🏆It is a blood bath in the spot markets again! Good thing I am trading Futures :)
Good job and congratulations to everyone that has been following my lead on this trade! :))
-The Vizionary
- DM Dynamic Trading LLC
CHFJPY: Double topCHFJPY: Double top
Correction 110.6 - 109.12
If you like what I do, put 👍 and subscribe
Waiting for your comment, what do you think about this? 👇👇👇
HIVE and the Gann Square of ninePlaying with the Gann sq of 9 and looking for relationships to predict support and resistance based solely on Gann's sacred maths...
Intro and Apologies - all be adding new pair analysis from next 1stly I want to apologise for the WTI long play idea, It was rushed and I didn't pay much attention.
I hope none of you who saw it lost to much money, If you did DW we will get it back soon.
So without further ado
Hey Hey Hey, Names Jay, From London UK, 37, 2 Children, 1 girl just turn 7 and my lil man is 3.
Been studying trading for 4 years, Paper traded for a the second year of the four and been trading proper for 2 years.
Its definitely been a wild ride with many lows and few highs but hey thats the learning curve.
As of now I would say my Trading style is quite balanced some TA PA FA.
Im a lover of DIVERGENCE TRADING.
ERRRRRRRRRR CANT THINK OF ANYTHING ELSE FOR NOW.
Oh feel free to message me
will start analysis of other pairs thru this week but more than likely next week.
GBPJPY (Do You See Some Profit Pips?)This is a great set up for profit on some pips without a large stop-loss, especially day trading or scalping.
Remember 80% of the time, from 2 a.m. to 5 a.m. EST/USA price action makes a HIGH or LOW for the day.
If you catch this right away you can ride daily trends without many issues.
Risk Management is always #1 so you can trade Forex for a lifetime.
The daily range was around 100 pips, the question is: How many could you have gotten without much risk?
BTC- my original picture Now, let’s go back to the original picture of my Head and Shoulders. Does it seem to be playing out? Ide say so.
Onto our next bottom. My picture says 7300, so that’s what I’m sticking with. No new drawings or ideas. That’s it. This could be our final bottom before we breakout to new highs.
Also, we can be seeing ANOTHER head and Shoulders. It seems, that pattern has been pretty popular lately :)
BTCUSD before rising.BTCUSD before rising. We take advantage of the rule that it can turn north from half of its daily ATR movement (D1ATR50%). Those who have been following this site for a long time may see that I use this set of rules frequently. In fact, this is one of my "starting rules". Nor is it 100% accurate (like nothing on the stock market) But the hit rate for this mathematical model is much higher than 50% (85-90%). The point of money management is that we always use a hit rate strategy above 50%. The reason for this is that we usually go for 2RR (risk-reward) positions. -Kezdőknek. for example, 100 usd Stop Loss-200usd profit- If our hit rate is greater than 50% and our strategy has an average profit margin above 2RR, then we are sure to make a profit in the long run.
#BTC Bullish Flag Pattern 1D#BTC is showing a bullish Flag Pattern on 1D , which includes -as we know-
- The flag pole
- The flag
- The continuation
The Flag pole, starting from the bottom at 6875 which represent a major support and was a big price bounce from it, ends at 10427 the Highest price in this trend.
the flag was formed after the correction starting from the previous 10427 level until -+ 8350 which was a good support on Jan. 24,2020 to bounce from it and continue the uptrend.
the Continuation Started as I think from the previous level @8350 zone and will go up with some corrections from time to time to reach 11831 ,
Many of you will ask why that level (11831) ?
The point is that the flag pattern when formed, we take the length of the Flag pole , and clone it when the flag is formed, so I expect to see the same length of growth to 11831 , the same level is a major Fibo level 1.618.
If you like my idea, Like or comment, share your opinion, don't be shy.
TOTAL2: PumpTOTAL2: Pump
The full market capitalization of cryptocurrencies without BTC in $
Most likely there will be an exit up
If you like what I do, put 👍 and subscribe
Waiting for your comment, what do you think about this? 👇👇👇
Another 25 bps cut in interest ratesAnother 25 bps cut in interest rates This analysis predicts a FED 50 bounce cut. The chart shows the yield curve of the two-year US government bond and its future path. The current analysis attempts to predict the next three months' interest forecast. Let's look at the chart. It can be seen that in the shorter term, the market once again ran ahead. It can be seen that the intervention was a hurry for the Fed to announce a further cut in interest rates at the open market committee meeting on March 18. In my opinion, this can happen if the market prices future rates in the 0.5% range within a few days. In the event that the futures interest rates continue to fall as a "falling knife", it can be stated with certainty that, in addition to interest rate cuts, additional asset purchase incentives may be announced.
Interesting days are coming.Interesting days are coming. In my analysis, I indicated that there could be a 50 basis point cut in interest rates. Although intervention could have been anticipated, early in the morning, it surprised everyone. Let's look at the analysis. Apparently it did not affect market pricing. We have reached the technical target price. This is 0.611% (The chart in the analysis is the yield curve for two-year bonds) This means that the market expects such a rate for the next two years. In other words, we can say that Future is a curve of interest. In my opinion, the exchange rate can now calm down. A back adjustment may be made to the 1% level of the interest rate band. After that, the market greed may start again. The market may price interest rates close to 0% (0.1%).
Harmonic shark strategyGuys, before getting started please dont forget to leave a like
& let me know your thoughts about this post in the comments below.
The shark pattern anatomy can be found online, I won't be going much into that. If you are interested in learning how to spot these patterns yourself, make sure to look for it.
With this post I will be looking at the issue of having the same kind of pattern giving two different signals. I have highlighted two bull shark patterns, two bullish signals where one produces a bullish move while the other causes a bearish move and a significant decline in price.
These two set-ups are identical, still far from apart. A quick view and study of the market will show just that.
So lets get into it:
How do you know if a bull shark is going to cause a reversal or a continuation?
Lets start with the (true) bull shark on the left. This is how it should have been traded:
Strong supply level at X. The shark completion point is 88.6% XC, with the stops just below the X point. Targets are the usual 50% and 88.6%
So what made this pattern a winner?
A quick view on the left side of the chart shows prices trending in a descending channel which simply means it is a downtrending market. The first sign of a reversal was when price broke the upper range of the channel and then traded above it. This caused a shift in momentum. If a bullish pattern then occurs you should expect a reversal based on the overall structure. If price starts to make lower lows, it just means the trend was stronger then usual and it could reverse at another level, for example the 1.13% XC for shark patterns. All though, a break below the structure does indicate that it is a strong trending market. We then look at the former leg and see a 150 pip decline, with the previous decline being 180 pips. This shows that the declines are getting smaller and smaller.
Now lets look at the second bull shark pattern on the right side of the chart. Here we have a kind of extended shark, since we see a test of the 113% XC level, price fails to close below this level which means that the shark is still valid:
Now, how come this shark pattern caused a decline?
Lets try to look at the structure again and the former leg again:
By using the parallel channel this time we can visually see an ascending channel, which simply means the current market is in an uptrend. Now in an uptrend there should be no sign of a bullish trend reversal set-up, and you would simply need to ask yourself: Should a bullish reversal occur in an uptrend?
No, if it reverses in an uptrend its going down. Besides, we already know that a harmonic shark pattern is an emerging harmonic 5-0 pattern, which means the bull shark is now a bear 5-0.. Simple does it!
As you can see in the chart a 5-0 pattern usually causes a strong move depending on the pattern in the market. 261.8% of XC (OB) is a good profit target for these set-ups..
Thank you for reading and make sure you leave a like for the post!
