3 Steps to Trading Harmonic Price Patterns

As you may have guessed, dealing and raking off Harmonic Price Patterns is all about having the ability to spot those “perfect” patterns and buying or selling on their completion. To spot Harmonic Price Pattern, three basic steps in spotting are involved:

Step 1: First Locate a potential Harmonic Price Pattern

Step 2: Ensure to Measure the potential Harmonic Price Pattern

Step 3: Then Buy or sell on the completion of the Harmonic Price Pattern

By successively stepping these three basic steps, you can be able to find high probability setups that will guide you grab those oh-so-lovely pips.

Now Lets figure out this process in action.

Step 1: First Locate a potential Harmonic Price Pattern.

Now That looks like a potential Harmonic Price Pattern. But at this juncture, We are not certain of the nature of the pattern.

It resemble a three-drive, but it could be a Bat or a Crab not specific. And it could even be a Moose, but In any situation we need to label those reversal points.

Step 2: Measure the potential Harmonic Price Pattern.

Applying the Fibonacci tool, a pen, and a piece of paper, lets break down our observations.

Move BC is .618 retracement of move AB.

Move CD is 1.272 extension of move BC.

The length of AB is roughly equal to the length of CD.

This pattern certifies for a bullish ABCD pattern, which is a powerful buy signal.

Step 3: Buy or sell on the completion of the Harmonic Price Pattern

The moment you see the pattern is complete all you need to do is to respond properly with a buy or sell order.

Now In this condition, you should buy at point D, which is the 1.272 Fibonacci extension of move CB, and put your stop loss a couple of pips below your entry price. Sounds simple right？ But it's not precisely.

The trouble with harmonic price patterns is that they are so accurate that they are so hard to spot, it is kinda like a diamond in the rough. Above to just understand the steps, you need to have hawk-like eyes to point out potential harmonic price patterns and a lot of patience to stay away from jumping the gun and stepping in ahead of the pattern completion.