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Harmonic setups

My Harmonic trading guide

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I have been posting some harmonic setups over the years, I thought maybe a simple harmonic trading guide might help readers who are following this type of trading. For the harmonic patterns I am using, there are some Fibonacci ratios to follow. They might look complicated, but they are not. Once you get the hang of them, it is not too difficult to identify.

One of the important things to note is, I do not trading harmonic patterns exclusively. The patterns are used as an aid to my over analysis, an odd enhancer you may say.

Secondly, I prefer to look at harmonic patterns in higher time time frames, such as 4 hours and daily. This is not to say the patterns do no work in lower time frame, it is just personal preference. I found that the patterns work well in medium to longer term swing trading.

For the start, harmonic patterns are divided into two categories, Extension patterns and Retracement patterns.

  • Extension patterns are Bullish Butterfly, Bearish Butterfly, Bullish Crab and Bearish Crab.
  • Retracement patterns are Bullish Gartley, Bearish Gartley, Bullish Bat and Bearish Bat.

These are the patterns that I used, and the list is not exhaustive. The “hardcore” harmonic traders might look at more patterns such as 5-0, Shark etc and in more time frames.

So here are the key factors I am looking at when using harmonic patterns

  • Identify key market levels, in other words, key support resistance levels. This one of the MOST important step.
  • Identify established price channel. A channel also represent the current trend, applying the appropriate patterns to follow the trend.

Harmonic Trading Guide

Below are the patterns with respective Fibonacci ratios. I also prepared two simple cheat sheets in PDF forms for readers who would prefer to print it out.

Harmonic Trading Guide - TraderGav.com
Harmonic Extension patterns
Harmonic Retracement patterns
Harmonic Retracement patterns

My opinion about harmonic trading is, Do Not Complicate things. Keep it simple, be clear with what you are doing, are you using the patterns as entry trigger? or are you using them for directional bias setting (I will discuss more on this in the future posts),  and, as always, make sure the patterns are forming in the right place, i.e key levels or channels.

Here are the cheat-sheets in PDF format that I have prepared in case you prefer a printout.

Extension patterns

Retracement patterns

You can also find my harmonic setups/charts in Harmonic trading posts section

From the desk of TraderGav.com

Weekly Review of GOLD (XAUUSD) 30 JUL 2013

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GOLD XAUUSD Daily chart
GOLD XAUUSD Daily chart

In my previous post, we have identified the potential resistance zone around 1335. We are right there now. I would like to see a turn at this area, and projected target is at 1000 should the selling resumes.
But, it is not as simple as it sounds. There are road blocks in front of us.
let’s zoom into H4. I expect to see some good support around 1300. A break of H4 uptrend line (golden line in the chart) and 1300 support should provide some ‘feel good’ factors for bears to initial shorts again.
First target for the short side is the last swing low around 1180 , and 2nd is the completion of ABCD formation at 1000. Maybe the targets are over ambitious, but who knows? That’s the plan for now.

GOLD XAUUSD 4-Hour chart
GOLD XAUUSD 4-Hour chart

On the other hand, in case failed to ignite the selling engine, next resistance level is seen at area of 1527. Have a look at the weekly chart below. The ABCD projection is definitely hypothetical and extremely ambitious. We will review the price action later.

Gold XAUUSD Weekly chart
Gold XAUUSD Weekly chart

That’s all for now. What do you think? Let me message at the comment section.

From the desk of TraderGav.com

Chart Review GOLD (XAUUSD) 17 Jul 2013

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I always prefer to look at GOLD chart at the bigger time frame. It gives me a better picture. Let’s have a look at Spot GOLD (XAUUSD).

Here is the Daily chart of Spot GOLD (XAUUSD). It is trading slightly below 1300 area. My immediate upside target is around the 1337ish which is also the 61.8% Fib retracement with confluence of the upper band of daily channel and previous support turns resistance level.

GOLD D1 17Jul2013
17Jul2013

In the perfect scenario (which rarely happens..), I am looking at the resume of downtrend at the resistance zone mentioned above, and continue moving to complete the 1 to 1 projected movement (as shown in the green lines)

Let’s look into more detailed H4 chart.

A potential harmonic pattern is observed in H4. At the same resistance zone around 1337, as observed from Daily time frame, a bearish Gartley is forming. Although it is important to note 1300 will provide some pretty good support should GOLD break up from here.

GOLD H4 17Jul2013
GOLD H4 17Jul2013

 

That’s it, we have marked down some important levels to watch, and potentially do some businesses. Let’s “wait and see” now.