After covering the Fibonacci retracement and Fibonacci extension tool, then by combining them with levels, we can observe “Harmonic” patterns.

Harmonic patterns cannot be used on their own with fibonacci levels, even if they align correctly. What we need is context as well as symmetry between the waves. For example, AB wave should not move 20% in 1 hour and then wave CD 20% in 20 days. Time and symmetry are important factors when we look at trading these patterns as well.

Never trade harmonic patterns alone, as you need to look for at least 1 confluence with other chart elements. What are these chart elements, well they can be any at the level you are looking to buy

Officially you are not suppose to trade the C wave but instead wait for the D wave to finish because that can eliminate some of the risk however miss out much of the gain to wave D. Confidence is what makes the difference.

The trick is to look for certain confluences and possibly align them with a strategy of some sort.

The following patterns are known as harmonic patterns and we have listed the most popular ones. If you look at the structure of the harmonics, many of them fit into trading strategies such as swing failure patterns and Elliot wave formations for the likes of rising wedges, triangles, etc. For further information, you require to be a subscriber, and by clicking on the bars, you will access this information.