It is important to note that Harmonic Trading works on any time frame – intra-day, daily, weekly or monthly charts. I believe the clearest trade opportunities, or “set-ups,” appear on daily charts for position or swing trades. However, hourly charts provide excellent set-ups for shorter-term or day trades. It is also amazing that these methods work dowmarkets on longer-term charts, as well. Weekly or monthly charts are excellent measures of historically critical areas in the financial markets. Harmonic Trading is a methodology that utilizes the recognition of specific price patterns and the alignment of exact Fibonacci ratios to determine highly probable reversal points in the financial markets.
- Essentially, this type of trading is respecting the natural ebb and flow of buying and selling.
- In doing so, trades are executed at those areas where the natural rhythm of the market is changing.
- Quite often, the harmonic techniques identify trades at or very close to the exact reversal point.
- The information provided herewithin is for educational purposes exclusively.
Any opinions expressed herein are those of the author and do not necessarily reflect the opinions of Scott Carney, HarmonicTrader LLC or its affiliates. Harmonic price patterns take geometric price patterns to the next level by using Fibonacci numbers to define precise turning points. Unlike other common trading methods, Harmonic trading attempts to predict future movements. The most important principle inherent within the Harmonic Trading approach is the ability to differentiate various types of cyclical price action that adheres to specific structural and ratio conditions.
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Price fluctuations represent cycles of growth and decline (sell-off). Similar to many of life’s cyclical growth processes, these movements can be quantified by their relative Fibonacci ratio relationships and analyzed to define unique technical situations. The important concept to grasp is that price waves or distinct price moves are related to each other. Futhermore, price patterns that are quantified by the alignment of precise ratios manifest these relationships, and provide a means to determine where the turning points will occur.
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We had warned a lot of “weakness in US stock indexes in the medium and long term as well” since last September, and after that we saw shares that fell by more than 50%. The current situation in the medium term The Dow Jones reached the important weekly support 33100, which if it closes below it will open the way for more decline to and may extend to close… In doing so, trades are executed at those areas where the natural rhythm of the market is changing.
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When these turning points are identified correctly, trades are executed at a price level where the cycle is changing. Essentially, this type of trading is respecting the natural ebb and flow of buying and selling. In doing so, these trades are executed “in harmony” with the market. For example, when a stock is bought at this turning point, the majority of the selling that has driven the price down is very close to ending. Quite often, the harmonic techniques identify trades at or very close to the exact reversal point. This methodology assumes that trading patterns or cycles, like many patterns and cycles in life, repeat themselves.
The key is to identify these patterns, and to enter or to exit a position based upon a high degree of probability that the same historic price action will occur. Although these patterns are not 100% accurate, these situations have been historically proven. If these set-ups are identified correctly, it is possible to identify significant opportunities with a very limited risk. The information provided herewithin is for educational purposes exclusively. Information contained herein is provided for informational purposes only and does not constitute an offer or a solicitation to buy, hold, or sell an interest in any product or other security and is not intended as investment, tax, or legal advice.