Studying the popular harmonious trade Forex pattern
Among traders, there is an opinion that it is easier to find an entry point to a position than an exit from it. The market is governed by Greed and Fear. In the context of consolidation, the use of the Greed-based "buy and hold" principle often results in losses. On the contrary, on the trend market, Fear and premature closure of the long or short positions will have you biting your elbows. "If I didn't exit, I would be golden now!" Therefore, for the correct identification of exit points, you need to understand at which stage the market is now. It will be reasonable to apply the principles of harmonious trade.
Harmonious trade on Forex means the branch of technical analysis, which allows us to identify the most likely areas of reverse with the help of a combination of patterns and Fibonacci ratios. This trading system is based on the assumption that the market, like life itself, strives for harmony. If so, you can try to determine the levels from which the quotes for a certain instrument will rebound. Virtually all models studied within the framework of this educational blog are components of harmonious trade, so for those of you familiar with them, it will be enough to add to them the experimentally determined Fibonacci ratios and take the first step towards this technique of technical analysis. For example, at the heart of the harmonious pattern Shark lies Anti-Turtles - the pattern well known to us from previous posts.
Bearish and bullish Shark pattern
We are talking about two successively growing peaks on a bullish market or about two falling lows on a bearish market. An important feature that can be regarded as a filter is point B (in Anti-Turtles - point 3) exceedig point X(1) by 13% -61.8%. If this condition is met - welcome to the Shark pattern! Its targets are located at the levels of 88.6% and 113% of the 0-B wave. Near these marks the probability of reversal is high.
Bullish Shark pattern in the AUD/CAD chart
Try to build it yourself on the price chart of the AUD/CAD using the options in the LiteForex cabinet, which in my opinion offers the best platform for graphical analysis.
Models of harmonious trade are used for two main purposes: to search for entry points (classical approach) and to identify the closing moments for previously opened positions. For example, in the case of GBP/JPY there was an implementation of the Anti-Turtles according to strategy 2B Base/Top byVictor Sperandeo with a target at 113% of the XC wave.
Bearish Shark pattern in the GBP/JPY chart
The location of targets at 88.6% and 113% is called the convergence or reversal area. If there are confirmation signals, whether they are from indicators, signals from price action or any other methods of technical analysis, you can think about the reverse transaction. Thus, in the case of GBP/JPY, the emergence of a countertrend trade model Anti-Turtles in the field of convergence is a good reason for the formation of a short position in the pound against the Japanese yen. To build a strategy, we again turn to Victor Sperandeo's technique. The target level is 113%.
Bullish Shark pattern in the GBP/JPY chart
Therefore, the application of the principles and tools of harmonious trade allows the trader to work on the design of the trading system with more confidence. In this case, a combination of previously studied price action patterns and Fibonacci ratios is a powerful tool in the trading arsenal. We all strive for harmony, why should not the market do the same?
In the following materials, we will move step by step in the study of this area of technical analysis and find a different use for such patterns as 1-2-3, Three Little Indians and others in order to improve our own trading.
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Real-time price chart of GBPJPY
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.