As you may have guessed, profiting off Harmonic Price Patterns is all about being able to spot those “perfect” patterns and buying or selling on their completion.
There are three basic steps in spotting Harmonic Price Patterns:
By following these three basic steps, you can find high probability setups that will help you grab those oh-so-lovely pips.
Let’s see this process in action!
Oh wow, that looks like a potential Harmonic Price Pattern! At this point in time, we’re not exactly sure what kind of pattern that is.
It LOOKS like a three-drive, but it could be a Bat or a Crab…
Heck, it could even be a Moose!
In any case, let’s label those reversal points.
Using the Fibonacci tool, a pen, and a piece of paper, let’s list down our observations.
This pattern qualifies for a bullish ABCD pattern, which is a strong buy signal.
Once the pattern is complete, all you have to do is respond appropriately with a buy or sell order.
In this case, 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.
Is it really that easy?
The problem with harmonic price patterns is that they are so perfect that they are so difficult to spot, kind of like a diamond in the rough.
More than knowing the steps, you need to have hawk-like eyes to spot potential harmonic price patterns and a lot of patience to avoid jumping the gun and entering before the pattern is completed.