Harmonic patterns are used like any other chart pattern to identify price trend direction. These patterns are combined with Fibonacci retracement and expansion levels to identify possible retracements of recent trends and show areas of continuations of the overall trend.
The Fibonacci numbers to define accurate trading points and profit targets. The signal for entry is when the price is approaching point D. The stop is placed few pips below/above the farthest possible D level
The different forex harmonic patterns include:
- The A-B-C-D pattern
- The Three drive pattern
- The Gartley pattern
- The Butterfly pattern
- The Crab pattern
- The Bat pattern
The forex harmonic patterns can either be bullish or bearish chart patterns depending on their positions in the trend. And these patterns can be traded by following the three steps.
- Identify the pattern first.
- Measure the pattern using Fibonacci retracement and expansion levels to confirm
- Execute a buy or sell position after the completion of the pattern.
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...