What are Harmonic Patterns? Basic Concepts
Harmonic patterns are advanced technical analysis tools based on Fibonacci ratios. They identify price movements that form specific mathematical relationships, helping predict future price reversal points. First systematized by H.M. Gartley in 1935, these patterns are now used by professional traders worldwide.
The key advantage of harmonic patterns is their precision. Unlike conventional chart patterns, they are based on strict mathematical criteria, reducing subjective interpretation and enabling more objective trading decisions.
Fibonacci Theory Foundation
To understand harmonic patterns, you must first grasp Fibonacci theory fundamentals. The ratios derived from the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, 21...) are frequently observed phenomena in nature and financial markets.
🔢 Key Fibonacci Ratios
Primary Ratios
- • 0.618 (黄金比)
- • 0.786 (平方根)
- • 1.618 (黄金比の逆数)
Complementary Ratios
- • 0.382
- • 1.272
- • 2.618
The Four Major Harmonic Patterns
While there are many types of harmonic patterns, four are most important and practical. Mastering these will allow you to capture the majority of trading opportunities.
🦇 Gartley Pattern
Most fundamental and reliable pattern
- • AB = 0.618 XA
- • BC = 0.382-0.886 AB
- • CD = 1.272-1.618 BC
🦇 Bat Pattern
Characterized by 0.886 retracement
- • AB = 0.382-0.500 XA
- • BC = 0.382-0.886 AB
- • CD = 1.618-2.618 BC
🦀 Crab Pattern
1.618 extension is the key point
- • AB = 0.382-0.618 XA
- • BC = 0.382-0.886 AB
- • CD = 2.618-3.618 BC
🦋 Butterfly Pattern
1.272-1.618 extension range
- • AB = 0.786 XA
- • BC = 0.382-0.886 AB
- • CD = 1.272-1.618 BC
Complete Gartley Pattern Guide
The Gartley pattern, first introduced by H.M. Gartley in "Profits in the Stock Market" (1935), is the most historic harmonic pattern. Its high reliability has earned it the title "King of Harmonic Patterns."
⚡ Critical: Essential Gartley Pattern Requirements
Required Ratios
- • B点: XAの61.8%リトレース
- • C点: ABの38.2%-88.6%リトレース
- • D点: XAの78.6%リトレース
Validation Points
- • CD = 127.2%-161.8% BC
- • 強いトレンドの存在
- • 明確な5点構造（XABCD）
Entry and Exit Strategies
Even with pattern identification skills, you cannot generate profits without proper entry and exit strategies. Here we detail practical trading strategies.
📈 Entry Strategies
- 1. PRZ Confirmation Entry
Reversal confirmation after PRZ reach - 2. Scaled Entry
Multiple positions with distributed risk - 3. Breakout Avoidance
Stop loss at pattern invalidation level
📉 Exit Strategies
- 1. Fibonacci Targets
Profit taking at 38.2%, 61.8% levels - 2. Structural Support/Resistance
Profit taking at key price levels - 3. Trailing Stop
Maximize profits while protecting gains
Risk Management and Position Sizing
In harmonic pattern trading, risk management is the key to success. Even with high pattern accuracy, long-term success is impossible without proper risk management. We explain optimal risk management strategies for each Milton Markets account type.
💼 Recommended Settings by Milton Markets Account Type
Flex Account
- • Risk: 1-2% per trade
- • Leverage: 1:50-1:100
- • Slippage protection included
Smart Account
- • Risk: 2-3% per trade
- • Leverage: 1:500-1:1000
- • Utilize tight spreads
Elite Account
- • Risk: 1-2% per trade
- • Leverage: 1:200-1:500
- • 0.0 pip spreads
Advanced Techniques
After mastering basic harmonic patterns, you can improve trading accuracy by learning advanced techniques. Here we introduce sophisticated methods used by professional traders.
🎯 Complex Pattern Analysis
Analyze harmonic patterns forming simultaneously across multiple timeframes to find higher-precision trading opportunities.
- • Synchronized patterns on daily and 4H charts
- • Stronger reversal signals
- • Improved risk-reward ratios
🔮 Algorithmic Validation
Use automated tools to verify pattern accuracy and eliminate subjective judgment - an advanced methodology.
- • Ensure mathematical precision
- • Utilize backtesting results
- • Eliminate emotional trading
Start Your Harmonic Pattern Trading Journey
Master proper risk management and trading skills to aim for success with harmonic patterns. Start by acquiring fundamental trading techniques.