hey guys. i got a question here. i can't seem to find the answer on any of the harmonic trading books. so i hope some1 can help me out here.
the question is regarding the take profit for harmonic patterns. lets use ab = cd as an example..
if you are trading a ab = cd pattern. and you enter at c, you can take profit at d. this is pretty textbook.
however, ab = cd is a reversal pattern. so you enter a trade in the opposite direction a the point d. so now, how do you set your take profit now?
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Hello ,
From what understand the TP targets on all Harmonic patterns are the Fib ratios of the prior move. So it would be the Fib ratios of the C-D leg . 1st Target 38.2 , 2nd 50 and so on..... some people advocate using the 23.6 % as a mini 1st target as people will look to it and see what happens there first. For example if you get in the trade and price gets to 23.6 and has issues moving past it that may be a good sign that it may not continue to work out. When closes below it that may be a good sign that it will continue at least to target 1.
Again this is how I learned it , if anyone else has knowledge please share or if I am wrong please let me know.
From what understand the TP targets on all Harmonic patterns are the Fib ratios of the prior move. So it would be the Fib ratios of the C-D leg . 1st Target 38.2 , 2nd 50 and so on..... some people advocate using the 23.6 % as a mini 1st target as people will look to it and see what happens there first. For example if you get in the trade and price gets to 23.6 and has issues moving past it that may be a good sign that it may not continue to work out. When closes below it that may be a good sign that it will continue at least...
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Look at this picture of the EUR USD .. Notice how price is having a hard time closing below the 23.6 Fib level..... that could be a warning sign that the move may not hold true.
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Joined Jan 2012
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Status: Kicking A$$ and taking Pips!
|78 Posts
Here is an interesting one from this morning......A bullish butterfly formed on the 5 min chart..... I noticed that the 1st target 38.2 was also the end of an ABCD pattern that was forming at the same time. Price reversed once it hit that D point of ABCD.........luckily I was already out by then ....sometimes it is amazing how this stuff works !
I want to improve harmonic trading. Firstly, there are 3 main levels, which market typically reaches: 38.2, 61.8 and 127.2 Fibonacci. And I want some suggestions how to filter, if it is going to be counter trend or trend reversal. If it will be counter trend, then my TP1 would be 38.2 and TP2-61.8. If trend reversal TP1-61.8, TP2-127.2. Any opinions or ideas?
Beside that I do not agree with this part "there are 3 main levels, which market typically reaches: 38.2, 61.8 and 127.2 Fibonacci." I think there is no easy and 100% way to filter "if it is going to be counter trend or trend reversal.". Anyway, elements like fractal structure, swing dynamics, volume, cycles, etc will definitly help you to be more often correct.
Harmonic trading-harmonic patterns
