Trade Entries and Stops To enter a trade, I prefer a confirmation of reversal priceaction combined with a reversal trend change from the "reversal zones." at 'D'. It could be a Buy (in bullish patterns) or a Sell (in bearish patterns). Usually, 'D' is identified by a confluence of projections, retracements and extensions of prior swings (legs), universally called as "reversal zone." The entry criteria and pattern validity are determined by various other factors like current volatility, underlying trend, volume structure within the pattern and market internals etc. If the pattern is valid and the underlying trend and market internals agreeing with the Harmonic pattern reversal, then Entry levels (EL) can be calculated using price-ranges, volatility or some combination. Stop is placed above/below the last significant pivot (in 5 and 4-Point patterns it is below D for the bullish pattern, above D for bearish patterns). Target Zones Target zones in Harmonic patterns are computed based on the retracement, extensions or projections of impulse/corrective swings and Fibonacci ratios from the action point of the pattern structure. For example, in Gartley bullish pattern, the target zones are computed using XA leg from the trade action point (D). The projections are computed using Fib. ratios like 62%, 78.6% of XA leg and added to the action point (D). The extension ratios like 1., 1.27, 1.62, 2., 2.27, 2.62 are computed for potential target levels. The primary target zones are marked computed from D as 62%-78.6% of XA leg (or largest of XA and CD) as the first target zone and 127%-162% as the second target zone. Target Zone1: (D + XA*0.62) to (D+XA*.786) Target Zone2: (D + XA*1.27) to (D+XA*1.62)
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