Harmonic Pattern
Geometric figure based on precise Fibonacci ratios, used to anticipate reversals.
Beginner-friendly explanation
A harmonic pattern is a special shape on charts that follows precise proportions. These figures help traders find possible reversal points.
Example: The “Butterfly” pattern is one of the most famous: it suggests the price might soon change direction.
Intermediate-level insight
Harmonic patterns use Fibonacci ratios (0.618 – 0.786 – 1.618…) to define structure points. They include figures like Gartley, Bat, or Crab. Each point (X, A, B, C, D) has a calculated position.
Example: A valid Gartley pattern ends with point D between 0.786 and 0.886 of the XA leg.
Advanced perspective
Harmonic patterns require multi-criteria validation: Strict ratio compliance, favorable market context, confirmation from other tools (divergences, volume). Algorithms can detect them, but reading remains subtle.
Example: A bullish “Crab” at a support zone, confirmed by RSI divergence, offers a high risk/reward setup.
Technical Analysis & Charting
harmonic pattern, Fibonacci, ratios, gartley, butterfly, bat, crab, XA, structure, reversal