Harmonic Patterns

Harmonic price patterns take geometric price patterns and the predictability of the market’s
movement to an easier yet higher stage by using Fibonacci levels to define precise turning points.
Unlike other trading methods, Harmonic trading attempts to predict future movements. This is in
vast contrast to common methods that are reactionary and not predictive.

If not with an impulse, they can be identified by it being an uneven double top or bottom.

Uneven double
Uneven double Bottom
bottom

Uneven double
top.
Uneven double
top.

The Bat harmonic Pattern

The bat pattern was designed as swing / positioning trading strategy. Discovered by Scott Carny, the
bat pattern can be identified on any timeframe.

The way of trading the bat pattern is very similar to the ones of other harmonic patterns ( cypher,
butterfly, crab and gartley).
 A

Breakout

D
X

The XA leg

The bat patterns begins with a market movement / impulse which is illustrated as our X to A leg and
it has its retracement which is the A to B leg.

The AB leg

The AB leg corrects the XA leg by going down to 50% Fibonacci level ( place the Fibonacci from X and
drag all the way up to A to see if the 50% level has been met )

Note: The AB move remains valid as long as there is a 50% retracement of XA is met and there is no
candle which is closed below the 50% level, although the shadow can extend beyond the subjected
level.

50% Retracement
B of XA

X
The BC leg

The BC leg corrects the AB leg by going up to 61.8% Fibonacci level (place the Fibonacci from A and
drag all the way down to B to see if the 61.8% level has been met)

Note: The BC move remains valid as long as there is a 61.8% retracement of AB is met and this time,
there should be a candle which is closed above the 61.8% level but not above the 88.1% , although
the shadow can extend beyond the 88.1%.

C
61.8% Retracement
of AB.

The CD leg

The market forms the CD leg which is an extension of AB, the Fibonacci level which the CD leg is
supposed to extend to is 161.8% (see the Fibonacci module on how to measure the extension).

Note:

In a valid CD move, the 88.6% retracement move of XA by AD must be exactly in line if not 5 – 10
pips apart from extension level which is 161.8% of CD.

The CD leg cannot extend pass X, this invalidates the whole pattern.

B
161.8% extension of AB /
D 88.6 retracement of XA.

X
Execution

Entry

 Place a buy stop or a buy limit at the D point.

Targets

 Place your first TP 5 - 10 pips below your 38.2% (target one) of AD which will be met by the
breakout.
 Place your second TP 5 – 10 below your 61.8% of (target two) AD which will be met by the
breakout.

Stop loss

 When price is at D, place your SL 10 away from your X point / the most recent support below
X.
 When target one is hit, move your SL to breakeven / to D.

The Cypher harmonic pattern

The Cypher pattern was designed as swing / positioning trading strategy. Discovered originally on
the 60 minute timeframe, the Cypher pattern can now be identified on any timeframe.

The way of trading the Cypher pattern is very similar to the ones of other harmonic patterns (bat,
butterfly, crab and gartley).
C

Breakout

X
The XA leg
The Cypher patterns begins with a market movement / impulse which is illustrated as our X to A leg
and it has its retracement which is the AB leg.

The AB leg

The AB leg corrects the XA leg by going down to 38.2% Fibonacci level ( place the Fibonacci from X
and drag all the way up to A to see if the 38.2% level has been met )

Note: The AB move remains valid as long as there is a 38.2% - 61.8% retracement of XA is met and
there is no candle which is closed below the 61.8% level, although the shadow can extend beyond
the 61.8%.

38.2% retracement
B of XA.

The BC leg

The market forms the BC leg which is an extension of XA, the Fibonacci level which the BC leg is
supposed to extend to is 127.2% (see the Fibonacci module on how to measure the extension).
Note:

In a valid BC move, there must be at least a 127.2% extension of XA by BC and there shouldn’t be a
candle closed above the 141.4%

The BC leg must extend past the A point, failure to do so will invalidate the move.

C 127.2% extension of
XA

The CD leg

The market forms the CD leg which Is a 78.6% retracement of XC ( Plot your Fibonacci from X and
drag it all the way up to C and see if the CD leg ends at the 78.6% Fibonacci level.

78.6% retracement
D of XC

X
Execution

Entry

 Place a buy stop or a buy limit at the D point.

Targets

 Place your first TP 5 - 10 pips below your 38.2% (target one) of CD which will be met by the
breakout.
 Place your second TP 5 – 10 below your 61.8% of (target two) CD which will be met by the
breakout.

Stop loss

 When price is at D, place your SL 10 away from your X point / the most recent support below
X.
 When target one is hit, move your SL to breakeven / to D.
 When target two is hit, move your SL to the first target.

The Gartley harmonic pattern

The Gartley pattern was designed as swing / positioning trading strategy. Discovered originally by
H.M Gartley in 1935, the Gartley pattern can now be virtually identified on any timeframe.

Breakout

The XA leg

The Gartley pattern begins with a market movement / impulse which is illustrated as our X to A leg
and it has its retracement which is the AB leg.
A
The AB leg

The AB leg corrects the XA leg by going down to 61.8% Fibonacci level ( place the Fibonacci from X
and drag all the way up to A to see if the 61.8% level has been met )

Note: The AB move remains valid as long as there is a 61.8% - 78.6% retracement of XA is met and
there is no candle which is closed below the 61.8% level, although the shadow can extend beyond
the 61.8%.

61.8% retracement
B of XA.

The BC leg.

The BC leg corrects the AB leg by going up to 61.8% Fibonacci level (place the Fibonacci from A and
drag all the way down to B to see if the 61.8% level has been met)

Note: The BC move remains valid as long as there is a 61.8% retracement of AB is met and this time,
there should be a candle which is closed above the 61.8% level but not above the 78.6% , although
the shadow can extend beyond the 78.6%.

C
61.8% retracement
of AB.

X
The CD leg

The market forms the CD leg which is an extension of AB, the Fibonacci level which the CD leg is
supposed to extend to is 127.2% (see the Fibonacci module on how to measure the extension).

Note:

In a valid CD move, the 78.6% retracement move of XA by AD must be exactly in line if not 5 – 10
pips apart from extension level which is 127.2% of CD.

The CD leg cannot extend pass X, this invalidates the whole pattern.

Breakout

B
127.2% extension of AB
/ 78.6% retracement of
D XA
X

Execution

Entry

 Place a buy stop or a buy limit at the D point.

Targets

 Place your first TP 5 - 10 pips below your 38.2% (target one) of AD which will be met by the
breakout.
 Place your second TP 5 – 10 below your 61.8% of (target two) AD which will be met by the
breakout.

Stop loss

 When price is at D, place your SL 10 away from your X point / the most recent support below
X.
  When target one is hit, move your SL to breakeven / to D.
 When target two is hit, move your SL to the first target.

The Butterfly harmonic pattern

The Butterfly pattern was designed as swing / positioning trading strategy. Discovered originally by
Bryce Gilmore, it can be discovered on any timeframe.

The tactics of the Butterfly are very similar to the other well-known harmonic patterns like the Bat or
Crab, with this pattern we seek to identify 4 market moves and 3 major Fibonacci zones. The
combination of these moves forms the (XABCD) points that complete the pattern.

The XA leg

The Butterfly pattern begins with a market movement / impulse which is illustrated as our X to A leg
and it has its retracement which is the AB leg.

The AB leg

The AB leg corrects the XA leg by going down to 78.6% Fibonacci level ( place the Fibonacci from X
and drag all the way up to A to see if the 78.6% level has been met )

Note: The AB move remains valid as long as there is a 78.6% - 88.1% retracement of XA is met, there
is a candle which is closed below the 78.6% level and there is no candle closed below the 88.1% Fib
level.
A

78.6% retracement of XA
B

X
The BC leg

The BC leg corrects the AB leg by going up to 38.2% Fibonacci level (place the Fibonacci from A and
drag all the way down to B to see if the 38.2% level has been met)

Note: The BC move remains valid as long as there is a 38.2% retracement of AB, there should be a
candle which is closed above the 38.2% level but not above the 50.0%.

C 38.2% retracement
of AB

X
The CD leg

The market forms the CD leg which is an extension of XA, the Fibonacci level which the CD leg is
supposed to extend to is 127.2% (see the Fibonacci module on how to measure the extension).

Note:

In a valid CD move, the 127.2% extension move of XA by CD must be exactly in line if not 5 – 10 pips
apart from the 161.8% of B.

The CD leg must extend pass X.

Breakout

127.2% extension of XA
D / 161.8% of B
Execution

Entry

 Place a buy stop or a buy limit at the D point.

Targets

 Place your first TP 5 - 10 pips below your 38.2% (target one) of AD which will be met by the
breakout.
 Place your second TP 5 – 10 below your 61.8% of (target two) AD which will be met by the
breakout.

Stop loss

 When price is at D, place your SL 10 away from your X point / the most recent support below
X.
 When target one is hit, move your SL to breakeven / to D.
 When target two is hit, move your SL to the first target.

The Crab harmonic pattern

The Crab pattern was designed as swing / positioning trading strategy. Discovered originally by Scott
Carney, it can be discovered on any timeframe.

The tactics of the Crab are very similar to the other well-known harmonic patterns like the Bat or
Butterfly, with this pattern we seek to identify 4 market moves and 3 major Fibonacci zones. The
combination of these moves forms the (XABCD) points that complete the pattern.

The XA leg

The Crab pattern begins with a market movement / impulse which is illustrated as our X to A leg and
it has its retracement which is the AB leg.

X
The AB leg

The AB leg corrects the XA leg by going down to 61.8% Fibonacci level ( place the Fibonacci from X
and drag all the way up to A to see if the 61.8% level has been met )

Note: The AB move remains valid as long as there is a 61.8% - 78.6% retracement of XA is met, there
is a candle which is closed below the 61.8% level and there is no candle closed below the 78.6% Fib
level.

61.8% retracement of
B XA

The BC leg

The BC leg corrects the AB leg by going up to 50.0% Fibonacci level (place the Fibonacci from A and
drag all the way down to B to see if the 50.0% level has been met)

Note: The BC move remains valid as long as there is a 50.0% retracement of AB, there should not be
a candle which is closed above the 61.8% level although the candle can close above the 50.0%.

C 50.0 % retracement
of AB

X
The CD leg

The market forms the CD leg which is an extension of XA, the Fibonacci level which the CD leg is
supposed to extend to is 161.8% (see the Fibonacci module on how to measure the extension).

Note:

The CD leg must extend pass X.

Breakout
B

161.8% extension of
C XA

Execution

Entry

 Place a buy stop or a buy limit at the D point.

Targets

 Place your first TP 5 - 10 pips below your 38.2% (target one) of AD which will be met by the
breakout.
 Place your second TP 5 – 10 below your 61.8% of (target two) AD which will be met by the
breakout.

Stop loss

 When price is at D, place your SL 10 away from your X point / the most recent support below
X.
 When target one is hit, move your SL to breakeven / to D.
 When target two is hit, move your SL to the first target.