What is Harmonic Analysis? Harmonic trading is a series of strategies for technical analysis that seek to identify opportunities in financial markets by identifying price patterns and analyzing market structure.
This analysis mainly uses several price-based measurements in the markets, with the addition of several unprecedented strategies that create a system of interactive rules to improve the decision-making process in trading.
Price pattern analysis provides accurate and effective information on potential future trends.
Most importantly, Harmonic Trading has unique and effective technical measurement strategies that identify critical new patterns and illustrate the current knowledge base of Fibonacci theories and price pattern to develop accurate guidance and highly effective predictive tools for identifying and analyzing market trends.
Benefit from Harmonic analysis and how to link it with other analysis schools:
We can take advantage of Harmonic analysis to get great results after combining it with other analysis tools.Many speculative technical analysts and traders integrate Harmonic trading with classical analysis, and use Japanese candlestick patterns for a clear entry point and price reversal.
What are the additions that can be provided with Harmonic models?
For example, a Harmonic pattern in a chart of a currency pair, commodity or stock can be used to confirm that the pattern has been fully used.
- Japanese candles, such as a candle between a bar or a swallow candle, etc., define this type of candle as a reflection of the price action.
- Fibonacci ratios, where Fibonacci ratios work with harmonic models accurately and coherently.
- Areas of supply, demand, support, and resistances determine that a rebound can occur from those areas.
- Elliott waves, where Elliott waves determine that the wave ended within this level, and it will form a reversal wave.These schools or the tools of analysis that were visited if found with the model give the model high accuracy, and do not forget that the fundamental analysis is very important because the financial markets are subject to both fundamental and technical analysis.
What is the relationship between Harmonic analysis and Fibonacci ratios?
Harmonic models consist of price waves and these waves consist of four or more clear price waves. These waves are extracted from Fibonacci ratios.
What are the Fibonacci ratios used for harmonic analysis or harmonic trading?
The ratios that we will mention for use in the Harmonic models, because each model depends on the measurements on one of these ratios
0.382 – 38.2%
0.50 – 50%
0.618 – 61.8%
0.786 – 78.6%
0.886 – 88.6%
1.27 – 127%
1.618 – 161.8%
2.24 – 224%
2.618 – 261.8%
3.618 – 361.8%
Main Harmonic Trading Models
- ABCD Form (AB = CD)
- Butterfly pattern
- Gartley pattern
- Crab pattern
- Bat pattern
- Three waves
- Head and Shoulder Model
- Cup and Handle Cup with Handle