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Harmonic patterns is a recurrent geometric shape identified in the graphical analysis the quotation tool built at the trend lines of price movements in size, taken from the Fibonacci ratios .
the Main advantage of these models is the prediction of the future direction and depth of the trend, the scalability of the signal on the all periods (time frames). In today's article, we will consider the indicator assistant which will do all the routine for the search and identification of Harmonic patterns in the chart.
the characteristics of the indicators
Platform: MetaTrader 4
Currency pairs: any
Timeframe: M1 and up
Recommended brokers: Alpari, RoboForex, InstaForex
That for the Harmonic patterns ?
As you know, the volatility on the chart (correction and trends) often fit into the pattern of Fibonacci numbers. In the framework of any direction, the trader is able to predict in advance the depth of the pullback and a reversal level, both in price and time. It is sufficient to choose a reference point (usually the beginning of a rising or falling) and stretch the lines, channels, fans, arcs, extensions or time zones of the standard tools of Metatrader under "Fibonacci"
regardless of formation, the construction everywhere will be observed the proportion of ratios of standard range: 0; 23,6; 38.2; 50, 61.80; 78.6; 100 etc. the illustration clearly shows, as lines, rays, and vertical levels interact with each other, predicting and amplifying the signals future reversal (privatnih) points:
This property was first noted by Elliott and used in establishing the wave theory of proportions helped to define the top and base of the waves.
Pesavento showed how to use the Fibonacci proportions to find and build more complex geometric designs. For the frequent repetition of the same on the chart and the proportionality of segments of these figures, he called them harmonic patterns , and they were opened in 1935 by Harold Hartley.
Traders subsequently replaced the word "harmonic" in the name of the author, and "pattern" and the specific name of the figure. The first of them, assembled from pieces held by the points at Fibonacci levels, resembled a butterfly.
the Other modifications received remotely similar to their image of the name — from fish to bats.
Harmonic patterns were highly praised for accuracy and long term signals reversal/trend continuation and are a fully-fledged trading system. Its disadvantage was the difficulty of detecting and constructing formations. It was the ability of "traders trail", devoid of emotion and with a capped associative thinking.
the Harmonic Indicators Panel solve this problem using code to algorithmization search for harmonic patterns on all time frames and instruments available in MT4.
the Code solves three problems:
the Detection of rare harmonic patterns; search the entire list of patterns Gartley, Pesavento and Carney; Identification of patterns of formation. Installation and structure of indicators Harmonic Panel
the Archive contains three indicators of the file in two folders which names are a clue about the path their placement. The process of setting indicators in Metatrader universal and is described in detail in the relevant article – "How to install an indicator in Metatrader 4".
Find the same folders via the option "data Directory" and don't forget to restart the program after copying the files. Running Metatrader, open the settings window of the input parameters of the indicators, which can be found:
Through the Navigator window; Using the Menu "Insert", the option "Indicators" in the list "Custom".
note that the third Harmonic indicator Rare Panel is spaced back from the Panel and Harmonic Harmonic Panel Forecast.
the Indicators are not tied to a schedule and timeframe, so you can drag them from the Navigator panel or attach it using the option "Indicators" in any open window of MetaTrader 4 tool. The result of the work and start correctly will be the appearance of a table with a list of the scanned currency pairs and found pieces.
Despite the similarity of the discovered tables and models, three indicators Harmonic Panel they are different:
Harmonic and Harmonic Panel Rare Panel – a set of models; Harmonic Panel Forecast – presence of function of "incompleted" indicating the stage of pattern formation.
the figure below shows two tables with the same settings the search for harmonic patterns in the interval from M1 to MN. The difference in the number of cases is observed visually, you can see that the indicator on the left Rare column contains a Pattern different from a similar column to the right of the name. Harmonic Panel Rare only defines rare species patterns.
As can be seen from the figure above, each model appears in the table only after the end of the formation, after a certain number of bars specified in the column "Age". If you compare the two tables Harmonic Harmonic Panel and the Panel Forecast, the last line is "incompleted". Clicking on the box with the name of the frame and the tool, the trader can monitor the stage of completion of that can help him to draw preliminary conclusions on the future reversal or trend continuation.
Settings indicators Harmonic Panel
Settings three indicators affect the range, pricing accuracy, timeframe, variety of styles determined by the models, functional features: selection of pairs, time frames, colors, etc. the Main window is in the tab "Input parameters", is divided into blocks:
Dasboard Setting determines the display order of the rows in the displayed table and the scan options for finding models:
Symbols – a set of tools, the default is the currency pair, but the trader may enter any other asset (stocks, the futures).
it is Important! Write down the names of the currency pairs, if the broker publishes them in a common format, for example, with prefixes mUSD or other designations.
Is M1...MN Timeframe Enabled – set time-frames are enabled (true) for finding harmonic patterns; Sort By – select the column which will be sorted melon. The number of columns available for 6 types of filters with an identical title to sort; Sort Type – specifies the sort order for the selected filter: ascending order (Ascendent) or descending (Descendent).
Indicator Setting – the immediate settings of the indicator to search patterns on the chart:
SwingSearchDepth – period indicator, number of frames, within which the search for models; PriceProximityPercent – percent margin of error calculations; Display: Points, Ratios, Lines – option in the "true" displays associated with the construction of the model key points, line segments and ratios of Fibonacci (see rules of construction in the article " Harmonic patterns "); Display: Bat, Gartley, Crab, Butterfly, Cypher, Shark – model which in the "true" will be displayed on the chart and when the option "false" hidden; MaxHistoryBar is part of the history of the number of bars on which the model will be saved.
Display Setting – settings of colors patterns, line thicknesses, lines, labels and size of fonts are:
BullPatternsCollor – color patterns indicating future growth rates; Bear PatternsCollor – color models that predict a drop in prices; LineStyle – style of lines, of which the constructed model; DottedLineColor – color of the auxiliary lines harmonious pattern; LabelFontSize size of font used for text labels; LabelColor – color of text labels.
Setting Alert – notification system: sound while working in the terminal, sending e-mail and push messages.
Settings other two indicators differ from the above:
Harmonic Panel Forecast — two functions: BullIncompletedPanelColor and BullIncompletedPanelColor defining the color gamut of the emerging harmonic patterns; Rare Harmonic Panel is the presence of rows of Display listing the rarely occurring on the chart models: Alternative Bat, Three Drives, AB=CD, 5-0, Alternative AB=CD, Crab Deep. Description of principles of Harmonic indicators Panel
to use Harmonic indicators Panel, the trader is not necessary to delve into the mysteries of the geometry of the construction of harmonic patterns. Enough simple understanding that this is a signal to buy, if there is a bullish pattern and for sale, if this bearish formation.
after the formation of the last shape point price can move up or down by at least 50% and a maximum of 100% (or above) its limits.
In the example below, the trader observes Bullish Butterfly bearish butterfly, which in theory ensures the upward movement from point of completion (1) figures to the key of X or it is quite possible that above the maximum "wing tips".
the Existence of "boundary move" trend identifies the important parameter is "Age", determines the time elapsed since the formation of the pattern. For example, figure Cypher ("code"), which the traders often called "the Sniper" for the frequent testing of the signal has already been formed. The trader can try to take a position in long, given the coloring of the figure, indicating the expected direction of the price movement in the table (plus on the chart will be labeled as Bullish).
If the model worked for a long time and the price took a key take-profits (out of bounds) pattern, then it is considered waste and is not considered for entrance. Try to aim for the maximum duration of the "Age" equal to the period or the depth of the rate specified in SwingSearchDepth.
Selecting and displaying a specific harmonic patterns on the chart occurs by movement of the slider located on the right side of the table. You can also click on the window with the name of the symbol and TF. The display of the model and tool change time frame, chart will be automatically.
to trade the first candle after the pattern traders can use the Harmonic Panel Forecast. Selecting and displaying from the table row with the model incompleted, the trader should be aware of the risk of possible "redraw".
Harold Hartley and followers are not singled out specifically "favorite or least favorite" patterns in the books on trading are also no studies and evidence of the prevalence of the effectiveness of the signal of a particular formation. However, some traders believe that unusual and rarely seen species give a certain advantage in trade. So I created a separate indicator Rare, where you will find only rare harmonic patterns (which explains a small selection of their choices in the table, despite the abundance of tools and timeframes to search for).
the Types of harmonic patterns described by Harmonic indicators Panel
Supervisory Harold Hartley opened the property market to behave in a predictable way (rise or fall), after the occurrence of a certain formation of three waves. He identified the segments AB, BC, and CD, which may be preceded by a wave of XA and defined shape, called a butterfly. Proportional piling waves, border "wings", was the main requirement of predictability of the next period.
this is why the Gartley pattern is the most proportional and the most recognizable figure in which AB=CD and certain points b and D are tied to the Fibonacci levels of 61.8 and 78.6.
This rule is binding segments and points invented Pesavento, more widely which has interpreted the options for the location of the "butterfly wings". Therefore, the model Butterfly is more variable defines the wingspan and length of segments by using a number of different Fibonacci ratios and are not bound to a specific value.
Pattern "die Fledermaus" (the Bat ) opened in 2001, it is similar to "butterfly", but the distance XD is a multiple or close to a coefficient of 0.886, open D. Kane, if you root 4-1 extent of the level of Fibonacci 0.681.
the Model Cypher ("kefir", "code", "Sniper") is a relatively easily recognizable figure due to the particular wave of the sun. Other harmonic patterns she rarely comes over the interval XA, whereas "cipher" is the distinguishing feature:
Another example of this output segment BC beyond XA is the harmonic pattern of "Akula" (Shark) , the time of the formation which produces the "fin" of the triangle XAB. The formation was opened in 2011.
the pattern of "Crab" got its name because of the peculiarities of the small size of the segment AB relative proportions of CD and XA, which makes "filled" triangles are more like "claws" and not on the wings of a butterfly.
Figure AB=CD reveals the principle of finding this pattern in its name. In fact it is a geometric parallelogram, the proponents of the Elliott wave theory see it as a classic three corrective waves.
the Pattern 5-0 is considered the most precisely working out where observed, as in the above case, the parallelism and equality of the parties and the considerable length of the wave, VS (it is somewhat reminiscent of the rule of the third Elliott wave).
Three movements (Three Drivers), this is a rare model pattern, where the distance between the 1-2-3 and the length of AB and CD tend to the identity. The digital points are almost on one line.
In 2002, Scott Carney, disappointed in trading pattern "die Fledermaus", offered his own version, which entered the history of technical analysis as "Alternate Bat". The pattern differed from the rest by a factor of 1.13, and using the ratio of 1.618 AB=CD
the Ratio of AB=CD is the cornerstone of the theory of harmonic patterns, but applied the above ratio of 1.618 AB=CD has led to the creation of a model "Alternate AB=CD", where CD wave ends at odds of 1.27 and 1.68:
Carney Cattle was the main seeker of alternative models. Computing new proportions of harmonic patterns, he found the model Deep Crab with a deeper correction of point B relative to the wave XA. He set it at the level 88.6% retracement that did the difficult task of defining this structure, which differs from the other "short" wave AB.
for More details about the history, ways and methods of construction and methods of use of harmonic patterns can be read in a special thematic review .
Graphical analysis is a complex part of the theory of trading for shares of subjectivity in the rules of model-building. Harmonic patterns — no exception, even despite the fact that the Fibonacci — locked for many traders it is because of the difficulty of determining where the beginning point of the formation model.
the Indicators will be of interest to a wide range of participants trading on the Forex as a learning aid for the construction of graphical models, a new instrument for trading or additional filters in the strategy.
If you decide to use formations, open Gartley, or to examine their performance, always remember that they are subject to the General axioms, open since the days of Charles Dow: the models work with the trend, often the same on different time frames and are correlated in pairs with the US dollar.
Download indicators Harmonic Panel
With respect, Alexey Vergunov