Harmonic Pattern Cheat Sheets

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interests include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency ecosystems. 

 Why Are Harmonic Patterns Important?

Technical traders study price patterns and apply various Fibonacci ratios to determine critical points. Fibonacci retracement levels are horizontal lines that identify locations of support and resistance levels. Each level is associated with one of the Fibonacci ratios or percentages. It shows how much of a prior move the price has retraced. The direction of the previous trend is likely to continue. However, the price usually retraces to one of the Fibonacci ratios before that trend continues.

Fibonacci retracements and extensions are important harmonic trading indicators that identify support lines, identify resistance levels, place stop-loss orders, and set target prices.

What Is A Harmonic Pattern Cheat Sheet?

There are a lot of different harmonic patterns with specific price actions that need to be monitored. To aid pattern recognition and to simplify identifying the correct harmonic pattern, some traders use harmonic pattern cheat sheets.

These sheets illustrate various different harmonic patterns, both bearish and bullish versions, along with the required Fibonacci ratios between the various price swings and legs. An example Harmonic Pattern Cheat Sheet is illustrated below:

Example Harmonic Pattern Cheat Sheet (Source: ProTrader) 

 Conclusion

Harmonic patterns are exact in structure and exact in the relationships between price movements. This requires that the pattern show movements of a particular magnitude in order for the developing price pattern to provide an accurate reversal point. A pattern may begin to emerge that looks harmonic but if the specific Fibonacci levels do not align, the pattern will likely fail. Where the Fibonacci levels do align, patient traders can use this to their advantage to trade high probability entry and exit points.

All the views expressed on this site are those of Thomas Wettermann and do not represent the opinions of any entity whatsoever with which Thomas Wettermann has been, is currently, or will be affiliated. Trading digital financial assets such as cryptocurrencies can carry a high level of risk, and may not be suitable for all investors. Before deciding to invest, purchase, and/or trade cryptocurrency you should carefully consider your investment objectives, level of experience, adversity to risk and volatilities. The possibility exists that you may sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with cryptocurrency trading, and seek advice from a qualified and independent financial advisor.

Thomas Wettermann is not an independent financial advisor. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary of Thomas Wettermann, and does not constitute investment advice. Thomas Wettermann will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. All opinions expressed on this site are owned by Thomas Wettermann and should never be considered as advice in any form.