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"Ratios & Harmonics: a Different Way to Trade." Summary 37 replies

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Ratios & Harmonics: a Different Way to Trade

  • #161
  • Dec 28, 2012 10:19am Dec 28, 2012 10:19am
We can now draw our Fibonacci retracement lines from the low to the high of the main swing. This first retracement is the most important as it will identify what potential pattern or patterns we are looking at. Also, we can begin the process of elimination. Depending on this correction other patterns will be discarded.

So now our focal point become between the 38% and the 78% correction of the main swing. Price has to close somewhere in this zone and form a low. This low cannot be taken out by a lower close or all patterns become invalid and the process starts all over. Keep in mind that if this occurs, take a look at the previous swing because you could have missed something. Price has to stay within the confines of this zone! This correction will become point B or C of any pattern. Sorry the chart should say B or C in the green cube.
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If you fail to plan, you plan to fail.
  • #162
  • Dec 28, 2012 10:27am Dec 28, 2012 10:27am
waiting - GU
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not euphoria follower
  • #163
  • Dec 28, 2012 10:51am Dec 28, 2012 10:51am
Now that we have our first correction we can establish it as the dominant swing. I use this terminology because it has dominance over deciding what patterns we will discard and which one we will keep on the table. It also has price action trapped within its high and low so it also has dominance on price action. We now know we are dealing with a Gartley, Crab or ABCD all others are discarded per my rules of engagement as the close fell between the 50% and the 61%.

In the next post a Fibonacci will be extend from the high to the low to further define our pattern. We already know it can only be one of three so the process simplifies as price progresses.
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If you fail to plan, you plan to fail.
  • #164
  • Dec 28, 2012 11:06am Dec 28, 2012 11:06am
Quoting Mr. Pip
Going to get some Breakfast give me a few when I return I will start to discuss ratios and swings.

Are we seeing the power of harmonics? There is no guessing and no subjectivity. It's clear cut simple rules based trading. Once you grasp this you will be on your way to the 10%. I want everyone to join me here it's a lonely place.
Love it.I was amazed that it did drop to PRZ on Euro.I am all in.
In trading, you have to be defensive and aggressive at the same time
  • #165
  • Dec 28, 2012 11:19am Dec 28, 2012 11:19am
We can now extend the Fibonacci retracement line from the high and low of the dominant swing. Every swing in the process has its own role in helping us further validate the pattern that is forming. This swing will also iron down our unknown X,A,B,C.

To achieve this we use a conditional thought process our approach should always be an IF=Then process. Let me explain this a bit more. If this happens then I will do this.There is no guessing involved no subjectivity.

If the high of the dominant swing is taken out by a break above close above then the Gartley and Crab are discardedand we are looking at an ABCD.

If price retraces to the green cube then we are looking at a Gartley Pattern.

If price retraces in the dark pink cube then we are lookingat a Crab Pattern.

As you can see price pierced the 61.8 making it a Gartley Pattern and we can identify points X,A,B,C.

Our next post we will identify where point D should terminate and identify the all so important PRZ.
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Click to Enlarge Name: $EURUSD (60 Min) 12_28_2012 4.jpg Size: 106 KB
If you fail to plan, you plan to fail.
  • #166
  • Dec 28, 2012 11:33am Dec 28, 2012 11:33am
Mr. Pip i have question regarding formation of dominant swing.... at what point we know that this is the dominant swing... for instance price forms low again within 38 and 78 fib levels after few bullish candles and it can repeat again.. so how would we know that at this point the dominant swing is established?

Quoting Mr. Pip
We can now draw our Fibonacci retracement lines from the low to the high of the main swing. This first retracement is the most important as it will identify what potential pattern or patterns we are looking at. Also, we can begin the process of elimination. Depending on this correction other patterns will be discarded.

[font=Calibri][size=3]So now our focal point become between the 38% and the 78% correction of the main swing. Price has to close somewhere in this zone and form a low. This low cannot be taken...
  • #167
  • Dec 28, 2012 11:33am Dec 28, 2012 11:33am
Great we are almost there. We know we are looking at a Gartley and we need to identify where D is suppose to be and identify our PRZ.

D is by the rules of engagement and area of confluence between the anchor leg XA of 78.6 and a 127 extention of AB.

So now we have D identified great so this is where thepattern completes. Now we have to see what other harmonic element we can utilize to form the PRZ

We will do this in the next post.
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (60 Min) 12_28_2012 5.jpg Size: 106 KB
If you fail to plan, you plan to fail.
  • #168
  • Dec 28, 2012 11:57am Dec 28, 2012 11:57am
The PRZ is a magical place. This is where decisions are made and often fast. Price generally does not hang around here long. We don’t have a rule for how valid a PRZ is but the more confluence of harmonics and structure line up at a pattern completion point the stronger that PRZ becomes and also the reaction to price.

In this pattern we had the following:

We know price is to begin with at an exhaustion point (oversold by Fib extension).

We have nice confluence at D (78.6 and 127).

We have a Harmonic AB=CD Blue line.

We had a 138 Fib extension lining up with structure.

We now throw a cube around this area and bam the PRZ.

This particular PRZ had four areas of confluence and sometimes there may only be the pattern. The more you find the stronger the PRZ becomes. Don’t feel the pattern is any less tradable if it’s the only confluence you can find in the PRZ.

Well my friends you can see how we build a case for entry and have plenty of reasons to engage the market.

We identified weakness with harmonics and ratios and took advantage of a very high probability trade.

Are there any questions? Do I need to go over anything again?

Maybe tonight or tomorrow we will get into the PRZ
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If you fail to plan, you plan to fail.
  • #169
  • Dec 28, 2012 12:02pm Dec 28, 2012 12:02pm
Quoting alij79
Mr. Pip i have question regarding formation of dominant swing.... at what point we know that this is the dominant swing... for instance price forms low again within 38 and 78 fib levels after few bullish candles and it can repeat again.. so how would we know that at this point the dominant swing is established?
Once you have identified the main swing (no higher high or lower low) and that swing has a retracement of at least a 38% the dominant swing cannot be established.
If you fail to plan, you plan to fail.
  • #170
  • Dec 28, 2012 12:04pm Dec 28, 2012 12:04pm
Hey all need a break wife is made at me LOL I'll be back later please let me know yif the material presented is easy to understand. Ask away I will answer all questions.
If you fail to plan, you plan to fail.
  • #171
  • Dec 28, 2012 12:17pm Dec 28, 2012 12:17pm
Quoting Mr. Pip
Hey all need a break wife is made at me LOL I'll be back later please let me know yif the material presented is easy to understand. Ask away I will answer all questions.
Mr. Pip, really appreciate your time and effort, especially when it takes you away from family!!! Thx a million pips!
A couple of typo errors possible. Please review and clarify, after your family time of course.

Post 169: "that swing has a retracement of at least a 38% the dominant swing cannot be established.
Maybe you meant "can now"

Post 165: If the high of the dominant swing is taken out by a break above close above then the Gartley and Crab are discardedand we are looking at an ABCD.
Did you mean " a break above the close" or "a break above"
This is really great stuff and the way you're presenting sure looks like you've had some teaching experience.
Enjoy your family and your weekend!!
Barry
  • #172
  • Dec 28, 2012 12:31pm Dec 28, 2012 12:31pm
Quoting Mr. Pip

Are there any questions? Do I need to go over anything again?

Maybe tonight or tomorrow we will get into the PRZ
Everything is clear, so far.
The best way is to go with lessons how the market progress. Live examples.

Best Regards.
  • #173
  • Dec 28, 2012 12:34pm Dec 28, 2012 12:34pm
Mr. Pip

This is really fantastic stuff ....and an eye opener regarding a new way to trade and view charts Your videos are very helpful. If you get a chance...more videos would be wonderful if you could go through step by step process from X A through D to PRZ. I am getting a bit confused on how often to draw additional fib retracements or fib extensions after leg "A" is established.

Very grateful for your time and sharing

Ed
  • #174
  • Dec 28, 2012 12:44pm Dec 28, 2012 12:44pm
Quoting Mr. Pip
Hey all need a break wife is made at me LOL I'll be back later please let me know yif the material presented is easy to understand. Ask away I will answer all questions.
Ahhhh wifes... Always killing all the fun. lol Just kidding.

To be honest, I don't know much about trading harmonics yet... But I know all about family, and you should always make time for them.

I'll be waiting patiently for more lessons.
  • #175
  • Dec 28, 2012 12:59pm Dec 28, 2012 12:59pm
Mr Pip couple of queries clarification is required... i did not understand properly:

in post#165 you wrote "We can now extend the Fibonacci retracement line from the high and low of the dominant swing" by saying this you mean we draw fib retracement line from high to low and low to high of dominant swing both or only from high to low of dominant swing?

in post#167 with respect to identification of point D and PRZ how do we get 127 fib extension of point AB ? I suppose its by drawing fib retracement link from low to high of point AB...... pls correct me if i am wrong?

thanks.
  • #176
  • Dec 28, 2012 1:35pm Dec 28, 2012 1:35pm
Quoting alij79
Mr Pip couple of queries clarification is required... i did not understand properly:

in post#165 you wrote "We can now extend the Fibonacci retracement line from the high and low of the dominant swing" by saying this you mean we draw fib retracement line from high to low and low to high of dominant swing both or only from high to low of dominant swing?

in post#167 with respect to identification of point D and PRZ how do we get 127 fib extension of point AB ? I suppose its by drawing fib retracement link from low to high of point AB...... pls...
Post 165: you only draw 1 fib from the beginning of the dominate swing H/L to the end of swing H/L. In his example that's from A to B not B to A. This fib will show you how far (retrace) leg BC retraced the Ab leg, identifying what pattern to look for next.
Post 167: The 127 fib is an extension of the AB leg. Depending on what platform you use. On MT4 it can be part of the fib you drew from A to B. Do you know how to customize your fibs?
Right click on fib trend line to bring up properties. Add a fib -0.27 and in description put 127.
Let me know if you don't understand.
Barry
  • #177
  • Dec 28, 2012 1:40pm Dec 28, 2012 1:40pm
Mine look like this.
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Barry
  • #178
  • Dec 28, 2012 2:24pm Dec 28, 2012 2:24pm
Quoting Bary
Mr. Pip, really appreciate your time and effort, especially when it takes you away from family!!! Thx a million pips!
A couple of typo errors possible. Please review and clarify, after your family time of course.

Post 169: "that swing has a retracement of at least a 38% the dominant swing cannot be established.
Maybe you meant "can now"

Post 165: [font=Calibri][size=3]If the high of the dominant swing is taken out by a break above close above then the Gartley and...
Bary thank you sometimes we type and our fingers do not listen to the brain.

Post 169: "that swing has a retracement of at least a 38% the dominant swing cannot be established.
Maybe you meant "can now"


Yes, once a 38% is achieved the dominant swing is established.


Post 165: If the high of the dominant swing is taken out by a break above close above then the Gartley and Crab are discardedand we are looking at an ABCD.
Did you mean " a break above the close" or "a break above"

I meant what I wrote, I guess an easier way to say it is a close above the dominant swing.

Thanks agian Bary!
If you fail to plan, you plan to fail.
  • #179
  • Dec 28, 2012 2:30pm Dec 28, 2012 2:30pm
Quoting BalkanPips
Everything is clear, so far.
The best way is to go with lessons how the market progress. Live examples.

Best Regards.
The foundation and understanding have to be laid out first. This thread is an just getting started and I have provided to live examples specially today. The chart was posted last night and we followed it through completetion. Did I miss something? Move live examples will come but we must aal walk before we run. It would be a huge disservice to you and all if I wdid not cover the material thoroughly. I hope you can understamd this very important point.
If you fail to plan, you plan to fail.
  • #180
  • Dec 28, 2012 3:09pm Dec 28, 2012 3:09pm
Quoting Mr. Pip
The foundation and understanding have to be laid out first. This thread is an just getting started and I have provided to live examples specially today. The chart was posted last night and we followed it through completetion. Did I miss something? Move live examples will come but we must aal walk before we run. It would be a huge disservice to you and all if I wdid not cover the material thoroughly. I hope you can understamd this very important point.
I understand.
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