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Financial Technical Analysis Crypto Narrative Chapter 7 Harmonic Pattern

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Fajar Purnama
@fajar.purnama
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In Chapter 5, we draw lower and upper trend line to identify classic chart patterns but in this chapter we use Chapter 6 Fibonnaci Golden Ratios to measure harmonic chart patterns. Most harmonic patterns have 5 phases forming XABCD pattern. To quickly identify them is to find 2 mountains for bullish harmonic patterns and 2 wells for bearish harmonic patterns. The next thing to see is whether one of the mountains or wells is shorter than the other. Finally, the middle point is higher than the first and last point for bullish harmonic patterns and lower than the first and last point for bearish harmonic patterns. In short should look similar to an imperfect "M" letter for bullish harmonic patterns and imperfect "W" letter for bearish harmonic patterns.

The harmonic patterns are said to be inspired from music and wave theories of harmonic ratios. For example from José Rodríguez Alvira, Harmonic Series, an Octave have a ratio of 130 Hz / 65 Hz = 2. Harmonic patterns are defined by the measurements of Fibonacci Golden Ratios on the XABCD pattern.

The Most Popular Harmonic Patterns

Measuring Harmonic Patterns

To measure a harmonic pattern after identifying one:

  1. Label the XABCD points.
  2. Pull a Fibonacci Retracement from X to A to get XB and XD parameter.
  3. Pull a Fibonacci Retracement from A to B to get AC parameter.
  4. Pull a Fibonacci Retracement from B to C to get XAB or XB ratio.

In trading view, there is XABCD pattern tool where we do not need to measure manually like the previous steps for example in Metatrader. For upcoming trades, harmonic traders predicts the next Fibonacci Retracement Golden Ratio. Then they put a buy or sell limit with a certain stop loss percentage for example 5%. The previous examples are Bullish Gartley harmonic pattern. I found the Forex market having very precise Fibonacci Golden Ratio numbers when harmonic pattern occurs but not so precise with the cryptocurrency market especially if we use the candle's shadow instead of the closing price. This is probably because the market capitulation is still not high enough in cryptocurrency to suppress many market manipulation. Therefore, expect certain degree of tolerance in the Fibonacci Retracement measurements.

Gartley Harmonic Pattern

The most popular harmonic pattern is Gartley. After the impulsive phase, there are no extreme price fluctuation in the correction phase. The Fibonacci Golden Ratios are as below:

XB:** 0.618

  • AC: 0.382 - 0.886 BD:** 1.272 - 1.618
  • XD: 0.786

Bat Harmonic Pattern

Bat harmonic pattern looks like a bat's wings which are long but narrow. The distance between the middle and the first and the last points are long while the distance between the middle and its neighboring points are short. The Fibonacci Golden Ratios are as below:

XB:** 0.382 - 0.5

  • AC: 0.382 - 0.886 BD:** 1.618 - 2.618
  • XD: 0.886

Butterfly Harmonic Pattern

Butterfly harmonic pattern looks like a butterfly's wings. While in Gartly, one of the wing is smaller than the other but in Butterfly the last point breaks the price line of the first point making both wings equal. The Fibonacci Golden Ratios are as below:

XB:** 0.786

  • AC: 0.382 - 0.886 BD:** 1.618 - 2.618
  • XD: 1.272 - 2.618

Crab Harmonic Pattern

I do not know why they call this the Crab Harmonic Pattern. Maybe because crabs walks sideways and their pinches which is represented by one of its side longer then the other? The Fibonacci Golden Ratios are as below:

XB:** 0.382 - 0.618

  • AC: 0.382 - 0.886 BD:** 2.24 - 3.618
  • XD: 1.618

Some Other Harmonic Patterns

New Cypher Harmonic Pattern

The new cypher harmonic pattern I see as the reverse mountains, reverse wings, or reverse sides of any harmonic patterns where usually the left side is higher than the right side, here the right side is higher.

More Lists

Source: http://chartreaderpro.com/harmonic-pattern-ratios/.

NameXBACBDXD
Max Bat0.382 - 0.6180.382 - 0.8861.272 - 2.6180.886
Max Gartley0.382 - 0.6180.382 - 0.8861.128 - 2.2360.618 - 0.786
Alt Shark 20.446 - 0.6180.618 - 0.8861.618 - 2.6180.886
Anti Nen star0.5 - 0.7860.467 - 0.7071.618 - 2.6180.786
Leonardo0.50.382 - 0.8861.128 - 2.6180.786
Anti New Cypher0.5 - 0.7860.467 - 0.7071.618 - 2.6181.272
Max Butterfly0.618 - 0.8860.382 - 0.8861.272 - 2.6181.272 - 1.618
Butterfly 1130.786 - 10.618 - 11.128 - 1.6181.128
Alt Shark 10.446 - 0.6180.618 - 0.8861.618 - 2.6181.128
Deep Crab0.8860.382 - 0.8862.618 - 3.6181.618
A Crab0.276 - 0.4461.128 - 2.6181.618 - 2.6180.618
New Cypher0.382 - 0.6181.414 - 2.141.272 - 20.786
A Butterfly0.382 - 0.6181.128 - 2.6181.2720.618 - 0.786
Shark 10.382 - 0.6181.128 - 1.6181.618 - 2.2360.886
A Bat0.382 - 0.6181.128 - 2.6182 - 2.6181.128
Shark 20.382 - 0.6181.128 - 1.6181.618 - 2.2361.128
Nen star0.382 - 0.6181.414 - 2.141.272 - 21.272
Alt Bat0.3820.382 - 0.8862 - 3.6181.128
Navarro 2000.382 - 0.7860.886 - 1.1280.886 - 3.6180.886 - 1.128
A Gartley0.618 - 0.7861.128 - 2.6181.6181.272
1210.5 - 0.7861.128 - 3.6180.382 - 0.7860.382 - 0.786
White Swan0.382 - 0.7862 - 4.2370.5 - 0.8860.238 - 0.886
A 3 Drives0.618 - 0.7861.272 - 1.6180.618 - 0.7860.13 - 0.886
Partizan 20.128 - 3.6181.128 - 1.6181.618 - 2.2360.618 - 3.618
A 1211.272 - 20.5 - 0.7861.272 - 21.272 - 2.618
3 Drives1.272 - 1.6180.618 - 0.7861.272 - 1.6181.618 - 2.618
Black swan1.382 - 2.6180.236 - 0.51.128 - 21.128 - 2.618
HENRY – David0.128 - 20.44 - 0.6180.618 - 0.8860.618 - 1.618
STRONG HENRY –
David		0.128 - 2.6180.44 - 0.6180.618 - 0.8860.618 - 1.618
May-001.128 - 1.6181.618 - 2.2360.5 - 0.6180.5 - 0.618
DAVID VM 10.128 - 1.6180.3821.6180.618 - 3.618
DAVID VM 21.618 - 3.6180.3821.6180.618 - 7.618
SNORM0.9 - 1.10.9 - 1.10.9 - 1.10.618 - 1.618
COL Poruchik0.128 - 3.6180.382 - 2.61810.618 - 3.618
Sea Pony0.128 - 3.6180.382 - 0.51.618 - 2.6180.618 - 3.618
Partizan0.128 - 3.6180.3821.6180.618 - 3.618
TOTAL 10.382 - 0.7860.382 - 0.8861.272 - 2.6180.786 - 0.886
TOTAL 20.382 - 0.7860.382 - 0.8861.618 - 3.6181.128 - 1.618
TOTAL 30.276 - 0.6181.128 - 2.6181.272 - 2.6180.618 - 0.886
TOTAL 40.382 - 0.7861.128 - 2.6181.618 - 2.6181.128 - 1.272
TOTAL0.276 - 0.7860.382 - 2.6181.272 - 3.6180.618 - 1.618
Partizan 2.10.128 - 3.6181.1281.6180.618 - 3.618
Partizan 2.20.128 - 3.6181.1282.2360.618 - 3.618
Partizan 2.30.128 - 3.6180.618 - 1.6181.6180.618 - 3.618
Partizan 2.40.128 - 3.6181.6182.2360.618 - 3.618
BG10.128 - 0.8860.6181.6181
BG20.128 - 0.8860.7071.4141
BG30.128 - 0.8860.7861.2721
BG40.128 - 0.8860.8861.1281
BG50.128 - 0.8860.521
BG10.128 - 0.8860.3822.6181
BG20.128 - 0.8860.4472.2371
BG30.128 - 0.8860.521
BG40.128 - 0.8860.6181.6181
BG50.128 - 0.8860.7071.4141
BG60.128 - 0.8860.7861.2721
BG70.128 - 0.8860.8541.1711
BG80.128 - 0.8860.8861.1281
121 BG0.5 - 0.5771.128 - 1.7330.618 - 0.7070.447 - 0.786
NN Gartley0.6180.382 - 0.8861.128 - 1.6180.786
NN Bat0.382 - 0.50.382 - 0.8861.618 - 2.6180.886
NN Alt Bat0.3820.382 - 0.8862 - 4.2361.128
NN Crab0.382 - 0.6180.382 - 0.8862.236 - 4.2361.618
NN Deep Crab0.8860.382 - 0.8862.618 - 4.2361.618
NN A Gartley0.618 - 0.7861.128 - 2.6181.6181.272
NN A Bat0.382 - 0.6181.128 - 2.6182 - 2.6181.128
NN A Alt Bat0.236 - 0.51.128 - 2.6182.6180.886
NN A Butterfly0.382 - 0.6181.128 - 2.6181.2720.618 - 0.786
NN A Crab0.236 - 0.4471.128 - 2.6181.128 - 2.6180.618
NN A Deep Crab0.236 - 0.3821.128 - 2.6181.1280.618
NN Leo0.50.382 - 0.8861.128 - 2.6180.786
NN A Leo0.382 - 0.8861.128 - 2.61821.272
NN Total 10.382 - 0.7860.382 - 0.8861.272 - 2.6180.786 - 0.886
NN Total 20.382 - 0.7860.382 - 0.8861.618 - 4.2361.128 - 1.618
NN Total 30.236 - 0.6181.128 - 2.6181.272 - 2.6180.618 - 0.886
NN Total 40.382 - 0.7861.128 - 2.6181.618 - 2.6181.128 - 1.272
NN TOTAL ***0.236 - 0.7860.382 - 2.6181.272 - 4.2360.618 - 1.618
NN Bl Swan1.382 - 2.6180.236 - 0.51.128 - 21.128 - 2.618
NN Wh Swan0.382 - 0.7242 - 4.2360.5 - 0.8860.382 - 0.886

Mirrors