Harmonic Patterns

Jay Purohit
 Disclaimer
This presentation has been designed solely for educational purposes,
and is not an offer to buy or sell or a solicitation of an offer to buy or
sell any security or instrument or to participate in any particular
trading strategy. The information presented in this workshop is for
educational purposes only. Although every attempt has been made
to assure accuracy, we assume no responsibility for errors or
omissions. Examples are provided for illustrative purposes only and
should not be construed as investment advice or strategy.

We disclaim any responsibility for losses incurred for market

positions taken by attendees.

All the contents in this PPT is taken from book on Harmonic Patterns,
web portals and charting software.
HARMONIC PATTERNS
 Harmonic Patterns
✓One of the most reliable patterns.
✓Completely centered on Fibonacci numbers.
✓It enables you to enter the trade in a high
probability reversal zone with minimal risk.
✓Determine where the turning points will occur.
✓Rules-based method which requires discipline.
✓Provides predefined entry and exit point.
HARMONIC TRADING RATIOS
HARMONIC TRADING RATIOS
HARMONIC TRADING RATIOS
38.20%
50%
61.80%
70.70%
78.60%
88.60%
113%
127%
141.4%
161.80%
200%
224%
261.80%
314%
361.80%
 Harmonic Patterns
• AB=CD
• Bat
• Alt-Bat
• Gartley
• Butterfly
• Crab
• Deep Crab
• Shark
• Alt-Shark
• 5-0
• And many more advance patterns
Potential Reversal Zone (PRZ)

• Convergence of Fibonacci Ratios

• High Probability Reversal Zone
• Smaller the range, better it is.
• If price does not reverses from PRZ, it indicates
that the predominant trend is quite strong.
Rules for Trading Harmonic Pattern
• If PRZ is more than 2% and 5% on daily and weekly chart
respectively; then wait for reversal sign from candlestick
pattern.
• Keep the Stop-loss of 1.50% of stock value from extreme
point of PRZ for pattern on daily or lower time frame.
• Stop-loss would be 5% for pattern formed in weekly and
monthly chart.
• Keep the minimum target of 50% - 61.80% of last leg (CD)
and then trail.
• Avoid trade if any Gap or price pattern breakout happens
around PRZ.
• Avoid if extreme price move is there around PRZ as it
indicates a strong trend.
Candlestick Patterns can be used around PRZ

• Doji – Gravestone/Dragonfly
• Hammer
• Shooting Star
• Bullish & Bearish Engulfing
• Bullish & Bearish Harami
• Dark Cloud Cover
• Piercing Line
• Morning Star
• Evening Star
AB = CD PATTERN
 AB=CD Pattern

• Four point structure

• Initial price segment is partially retraced and
followed by equidistant move
• In the AB=CD, the C point will be a defining
level for the completion of the pattern.
• BC projection is most critical.
• 100% extension of AB from C point provides
the PRZ.
 Retracements used in AB=CD Pattern
If C point is ___ of AB move Then, D point must be ___ BC move

38.20% 224% or 261.80%

50% 200%

61.80% 161.80%

70.70% 141%

78.60% 127.20%

88.60% 113%

Also, 100% extension should be there i.e. AB move should be equal to CD

BULLISH AB = CD PATTERN
BULLISH AB = CD PATTERN
BULLISH AB = CD PATTERN
BULLISH AB = CD PATTERN
BULLISH AB = CD PATTERN
BULLISH AB = CD PATTERN

70.70%
C

A = 205.55
B = 183.85
C = 199.10

AB = 21.70
CD = 21.70 (100% extn)
B
D = 177.40
PRZ : 177.40 – 177.60 141% (177.60)
D
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
BEARISH AB = CD PATTERN
161.80% (1415.70) D
A = 1122
B = 1334.50
C = 1203.10
D = 1418 B

AB = CD (100% extn) @ 1415.60

PRZ = 1415.60 - 1415.70

61.80% C

A
BEARISH AB = CD PATTERN
Patterns to Avoid
Pattern to Avoid
Gap Around PRZ

A
78.60% C

B
CD = 100% extn of AB 127%
D
Pattern to Avoid

Breakdown around PRZ

Pattern to Avoid

Extreme Price Move

Pattern to Avoid
Extreme Price Move
Ask your queries
THANK YOU