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. 

What Is A Harmonic Pattern Scanner?

A harmonic pattern scanner is a software tool that aids the harmonic pattern trader. These software tools use algorithms (artificial intelligence or machine learning) that scan pricing histories and automatically identifies harmonic patterns. The tools aid traders by providing real-time identifications and notifications. Scanners provide an accurate trade signal to traders as soon as harmonic patterns are recognized.

Once a pattern is recognized, these tools provide easy to read and understand marked up charts and descriptions, labeling key price points and Fibonacci levels. Some scanners include a dashboard that allows traders to generate a watchlist for preferred types of harmonic patterns.

One advantage of harmonic pattern scanners is that they can scan and review a large number of patterns quickly and can provide a ranking to identify patterns of higher interest.

What Are the Advantages of Harmonic Patterns?

These patterns frequently occur and have a history of being repeatable, and reliable, thereby producing a high probability of success. Therefore, these patterns provide a clear structure for entry and exit points. Using harmonic patterns removes subjectivity from trading. These patterns must match the harmonic patterns exactly to be a valid trading indicator. This can make trading straightforward: do the price movements and Fibonacci ratios indicate an identifiable harmonic pattern? If not, then other trading tools may need to be used.

What Are the Disadvantages of Harmonic Patterns?

The actual price points and calculated Fibonacci ratios often do not exactly align with the clear structure required by a given harmonic pattern. This can make the proper harmonic pattern difficult to identify. In addition, it takes time for these five-point defined harmonic patterns to materialize. Some anxious traders may enter their trades early before all required price legs and swings are defined. 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.