This pattern has nice 61.8% fib retraces for B and C.  Better risk reward potential if the harmonic pattern completes in or around the 88.6% retrace of CD on favourable RSI readings.

T1 is the 38.2% retrace of CD of gartley harmonic pattern.

audchf bull gartley harmonic pattern

This weeks update is looking at 4 pairs showing harmonic pattern set ups. One, the audjpy, has already given me 160 pips profit as it completed a bear gartley harmonic pattern, my second half position was taken out. I re-entered for a short at 8376, T1 8206.

Yesterday's daily closing candle was a promising shooting star, but today's daily candle has breached resistance at X of the harmonic pattern and is now challenging the upper trendline of the rising channel. I am therefore suffering 120 pips of pain but my stop is a one to one risk reward, so I am still in the game. Lets see how it plays out. The other three pairs analysed in the video are audchf, which was a potential bull bat harmonic pattern, the cadchf which I am watching to see it can get up to complete a bear gartley harmonic pattern and the eurusd which has demonstrated a bear gartley harmonic pattern and then completed a bull gartley harmonic pattern amidst the fundamental trurmoil surrounding the as yet unresolved Greek bailout situation. I hope you find the update interesting,

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As well as this potential harmonic pattern, an asymmetrical head & shoulders pattern can also be discerned.  The neck line of this pattern often provides resistance.  T1 is below this neck line at the 38.2% retrace of CD. There is also some historical structure looking left to provide potential support against the trade moving in the wrong direction. If price does rally, then a good bullish sign for attaining T1 will be breaking and closing above the upper line of the descending channel.

A bat (bull or bear) harmonic pattern offers a good risk reward, giving it's potential reversal zone (PRZ) close to the X level of the pattern. Obviously the stop should be beyond X.  In this instance a one to one risk reward strategy means the stop would be placed at 9603 price level. Also ideally it is prudent to have the stop beyond the 113% extension of XA, which in this case it would be.

Let's see if this scenario plays out.  The beauty of using a harmonic pattern and elliott wave principle combined is that one can be predictive.  Obviously, not all predictions play out, but many do.  When they do you can be ready well in advance to decide whether or not you will get involved in the trade.  By doing such work ahead of time you will know exactly where to enter, place the stop and what your target should be.

The completion of the blue elliott wave 3 may be in place with the expectation that price will drop to at least the lower line of the rising channel for an elliott wave blue 4 completion. The elliott wave corrective expectation may indeed be a drop down to the extreme of elliott wave black iv level (8050), which is also the 50% Fibonacci retrace of the final CD leg of the bear gartley.

I have shorted this pair at 8376 and have target 1 at the lower channel line where blue elliott wave 4 may complete or at least meet significant support. If price breaks the lower channel line then it will then act as resistance and subsequently may result in price dropping to the level of elliott black wave iv which coincides with the 50% Fibonacci retracement of the CD leg of the bear gartley.   Otherwise it may rally from the lower channel line and move up to complete an elliott blue wave 5.

bear gartley

bear gartley

GBPNZD BULL BAT, TERMINATION OF ELLIOTT WAVE 3

 Check out my other trades with a bull bat pattern here

This weeks video update is looking at 4 pairs, AUDUSD, AUDJPY, NZDJPY and the GBPNZD that are showing nice harmonic patterns, Elliott Wave formations with associated Fibonacci percentages.

The AUDUSD and AUDJPY have formed bear gartleys, which are classic harmonic patterns. The AUDUSD bear gartley is currently challenging the X point of the gartley and is being confined within the upper trend line of a rising channel. It is also diverging on the daily RSI.

The AUDJPY has also demonstrated completion of a bear gartley 8 pips below the 88.6% PRZ and is now retesting this important Fibonacci perectage resistance area with RSI divergence, again on the daily.

Other harmonic patterns include the NZDJPY has formed bear bat. The NZDJPY bear bat is finding resistance at the 94.1% Fibonacci retrace of XA, with associated RSI divergence on the daily chart.

Again in our run of harmonic patterns GBPNZD has compelted a bull bat as it may have begun its countertrend reversal 13 pips above the 88.6% retrace of XA on daily RSI divergence. The harmonic bat patterns offer very good risk/reward, with low risk and high potential for larger reward. The bear gartley has a less favourable risk/reward but is a high probability win pattern.

Harmonic patterns work well when used in an Elliott Wave context, the GBPNZD may have completed wave 3, coinciding with the completion of the bull bat pattern in close proximity to the 88.6% retrace of XA. Elliott Wave counts for the AUDUSD and the AUDJPY bear gartleys are less clear. Elliott Wave count for the NZDJPY bear bat strongly suggests the high probability of a wave 3 completion coinciding with previous significant structure (X of bear bat) on daily RSI divergence.

Harmonic patterns with key associated Fibonacci percentages are clearly seen in this video