Harmonic Patterns
Harmonic patterns are a type of charting pattern used in technical analysis to identify potential reversals in the markets. These patterns are based on Fibonacci numbers and geometry and are used to identify potential support and resistance levels. Harmonic patterns are used by traders to identify potential price reversals and to time their trades accordingly. The patterns are formed by combining Fibonacci retracements and extensions with geometric angles.
History of Harmonic Patterns
Harmonic patterns were first developed by H.M. Gartley in his book, Profits in the Stock Market. Gartley identified a pattern that he called the Gartley pattern, which is still used today. Since then, other harmonic patterns have been developed, such as the Butterfly, Crab, Bat, and Shark patterns. All of these patterns are based on the same principles of Fibonacci retracements and extensions, combined with geometric angles.
Comparison Table
| Pattern | Fibonacci Retracement | Fibonacci Extension | Geometric Angle |
|---|---|---|---|
| Gartley | 0.382 | 1.618 | 88-112 degrees |
| Butterfly | 0.786 | 1.618 | 78.6-101.4 degrees |
| Crab | 0.382 | 2.618 | 161.8-224 degrees |
| Bat | 0.886 | 2.618 | 161.8-224 degrees |
| Shark | 0.886 | 3.618 | 261.8-324 degrees |
Summary
Harmonic patterns are a type of charting pattern used in technical analysis to identify potential reversals in the markets. These patterns are based on Fibonacci numbers and geometry and are used to identify potential support and resistance levels. Harmonic patterns were first developed by H.M. Gartley in his book, Profits in the Stock Market. For more information about harmonic patterns, traders can visit websites such as Investopedia, TradingView, and StockCharts.
See Also
- Fibonacci Retracements
- Fibonacci Extensions
- Geometric Angles
- Technical Analysis
- Support and Resistance
- Price Reversals
- Trend Lines
- Chart Patterns
- Price Action
- Candlestick Patterns
