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Harmonic Patterns

Harmonic patterns are a popular tool used by traders to identify potential reversal points in the market. These patterns are based on a series of Fibonacci retracements and extensions, which are derived from the golden ratio, a mathematical ratio found throughout nature. While the Gartley, Butterfly, and Crab patterns are commonly known harmonic patterns, there are alternative harmonic patterns traders can use to identify profitable trades.


Harmonic Patterns can be very hard to spot and Automate in your trading Strategy. This indicator will magically spot for you the various patterns and enables you to use it in an Automated strategy and back-test its performance!

This Indicator Detects 8 Harmonic Patterns, and these pattern configurations can be adjusted along with various visualization options.

The Patterns are:

1) Bat
2) Alternative Bat
3) Gartley
4) Crab
5) Deep Crab
6) Shark
7) Butterfly
8) Cypher


The indicator presented in this article  also provides several hidden plots to enable strategy automation and automatic back-testing, such as

  • PatternDetectSignal = -1 when bearish pattern is detected
  • PatternDetectSignal = -2 when bearish pattern is updated
  • PatternDetectSignal = 1 when bullish pattern is detected
  • PatternDetectSignal = 2 when bullish pattern is updated
  • PatternType = A number from 1 to 8 (as listed above) to indicate the pattern type
  • PatternCancelSignal = -1; when a bearish pattern is cancelled due to the last point exceeding limits
  • PatternCancelSignal = 1; when a bullish pattern is cancelled due to the last point exceeding limits
  • SwingSwitch = 1; late confirmation of reversal, to indicate a switch from bearish to bullish swing
  • SwingSwitch = -1; late confirmation of reversal, to indicate a switch from a bullish to a bearish swing

ATTENTION: Patterns can be cancelled after being identified, due to changes in the location of the last point in the XABCD Pattern. Make sure to have your own confluence to confirm your entries.

 


The Bat pattern is a harmonic pattern that is formed by an initial price movement, followed by a retracement of between 38.2% and 50%. The price then makes a second move up to a new high, which should be between 38.2% and 88.6% of the initial price movement. Finally, the price moves down to a new low, which should be at least 127.2% of the initial price movement.

 

The Alternative Bat pattern is similar to the Bat pattern but has a different structure. The pattern is formed by an initial price movement, followed by a retracement of between 38.2% and 50%. The price then makes a second move up to a new high, which should be between 78.6% and 88.6% of the initial price movement. Finally, the price moves down to a new low, which should be at least 127.2% of the initial price movement.

The Gartley pattern is a bearish reversal pattern that is formed by an initial price movement, followed by a retracement of between 38.2% and 61.8%. The price then makes a second move up to a new high, which should be between 61.8% and 78.6% of the initial price movement. Finally, the price moves down to a new low, which should be equal to the initial price movement.

The Crab pattern is a bearish reversal pattern that is formed by an initial price movement, followed by a retracement of between 38.2% and 61.8%. The price then makes a second move up to a new high, which should be between 161.8% and 261.8% of the initial price movement. Finally, the price moves down to a new

low, which should be equal to the initial price movement.

The Deep Crab pattern is a bullish reversal pattern that is formed by an initial price movement, followed by a retracement of between 61.8% and 88.6%. The price then makes a second move down to a new low, which should be between 161.8% and 224% of the initial price movement. Finally, the price moves up to a new high, which should be equal to the initial price movement.

The Shark pattern is a bearish reversal pattern that is formed by an initial price movement, followed by a retracement of between 88.6% and 113%. The price then makes a second move up to a new high, which should be between 113% and 161.8% of the initial price movement. Finally, the price moves down to a new low, which should be at least 161.8% of the initial price movement.

The Butterfly pattern is a bullish reversal pattern that is formed by an initial price movement, followed by a retracement of between 38.2% and 61.8%. The price then makes a second move down to a new low, which should be between 78.6% and 88.6% of the initial price movement. Finally, the price moves up to a new high, which should be

equal to the initial price movement.

The Cypher pattern is a bullish or bearish reversal pattern that is formed by an initial price movement, followed by a retracement of between 38.2% and 61

 

More premium indicators for Ninjatrader can be found HERE

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