Harmonic Pattern Analyzer™

Different Classes of Patterns

Before getting into how to use the Harmonic Pattern Analyzer™ (“H” on the neoHarmonics toolbar), it’s important to understand how the patterns are shaped and how we classify them into two main classes of patterns.  For a list and overview of the patterns, please visit chapter 2 of our Learning Guide.  Once you understand what you are looking for, however, the neoHarmonics tools takes the details of the actual Fibonacci levels and makes them incredibly fast and simple to analyze!

The Harmonic Pattern Analyzer™ (“H”) puts the patterns into two main classes, one where point C exceeds point A and one where it does not.  For example, the Gartley, Butterfly, Bat, Alt Bat, Crab, and Deep Crab all have point C as a retracement of the A to B leg.  We’ll call this “Class 1“.

To illustrate, here is a picture of a Gartley pattern.  Note the position of C in relation to the A to B leg (inside the range from point A to point B).  Again, think of this as “Class 1“.

Gartley Pattern Harmonic Pattern Analyzer

 

What we call “Class 2” patterns are ones where point C goes beyond point A (either higher or lower, depending on the direction of the pattern).  “Class 2” patterns are the Shark and Cypher patterns.  Below is an example of a Cypher pattern (also known as the “Royal Canadian”).  Note the location of C in relation to the A to B leg.

Cypher Pattern Harmonic Pattern Analyzer

 

The reason we put the patterns into two classes, is you use the tool in two distinct ways depending on the class of pattern.  These methods are outlined below.

(It’s important to note that the neoHarmonic tools do not automatically find patterns on a blank chart.  Instead, they are drawing tools used to analyze a set of swings dictated by the user.)

Harmonic Pattern Analyzer Basics

How to Use the Harmonic Pattern Analyzer™ (“Class 1″ patterns – Gartley, Butterfly, Bat, Alt Bat, Crab, and Deep Crab)

Step 1, Look for ABC:

After a significant high or low is put in, visually look for the ABC portion of the pattern.

Bearish example:  In this example, there is a low (point A) and a higher low (point C).  This creates the ABC portion of a potential pattern (noted by the blue lines).  Keeping this A, B, C move in mind, continue to step 2.

Looking for Harmonic Pattern 1 Harmonic Pattern Analyzer

 

Step 2, Analyze the Pattern:

If this market continues to rally from point C, where may it terminate and start going down?  Using the tool, drag from the low at point C to the left of point A (as illustrated by the red arrow in the chart below).  Knowing where you expect points A, B, and C to fall (from step 1, above), it’s important to drag X to the left of point A to make sure the tool correctly identifies points A, B, and C.  Also, it’s important to note that if point C is a “low”, then point X will be a “high” point above point B (and vice versa).  Continue to step 3 for a screenshot of the tool finding these swings.

Looking for Harmonic Pattern 2 Harmonic Pattern Analyzer

 

 

Step 3, Choose Point X:

Below is the tool in action.  After you click on point C, drag to where you want point “X” to be (see section on “Finding X” for detailed examples).  In this example, using the price that the “Suggested X” gives (indicated by the little blue arrow (blue line added for explanation purposes).  In the screenshot, the gray line between C and X is the line you actually draw, the tool will add the connecting lines, the labels, and the target area for D.  This example finds a “Deep Crab” pattern and outputs the target area for D with a rectangle and a dotted line within the rectangle.  The price of this dotted line is what you want to pay the most attention to!  As you can see, there was a lot of resistance at this area (indicated by the dark blue arrows).

Looking for Harmonic Pattern 3 Harmonic Pattern Analyzer

 

Once you get good at seeing this initial “ABC” pattern, you still start seeing them everywhere!  The chart below is the same chart as above, but looking at the minor swings.  There are more, but for sake of clutter and readability, only three are drawn.

Looking for Harmonic Pattern 4 Harmonic Pattern Analyzer

 

Bullish example:  A high is put in, then a lower high is put in (noted by the blue lines).  Where may this fall reverse?

 Looking for Harmonic Pattern 5 Harmonic Pattern Analyzer

 

Drawing from “point C” to point X, we see a “suggested X” price (noted by the little, blue arrow (blue line added for explanation purposes)).  Using this price as X (making sure X is to the left of A), we get a target area with two overlapping patterns (a Butterfly and a Deep Crab).  Paying the most attention to these horizontal, dotted lines in the rectangle, this gave a great entry area for the long.  (In this example, the two dotted lines are only 8 pips apart.)

 

Looking for Harmonic Pattern 6 Harmonic Pattern Analyzer

 

On the same chart, another long presented itself earlier (chart below).  They’re everywhere!

Looking for Harmonic Pattern 7 Harmonic Pattern Analyzer

 

Using the Harmonic Pattern Analyzer™ (“Class 2″ patterns – Shark and Cypher)

Step 1, Look for ABC:

After a significant high or low is put in, visually look for the ABC portion of the pattern.  In this case, we look for a lower high leading into a new high.

Looking for Harmonic Pattern 8 Harmonic Pattern Analyzer

 

Step 2, Analyze the Pattern:

Analyzing this class of pattern is slightly different than the “class 1″ patterns.  Instead of drawing the tool from point C and going left, you go from point A and go right (as indicated by the red arrow on the chart below).  Make sure you drag to the right of “C” to allow the tool to correctly identify the A,B,C points.  Also, it’s important to note that if point A is a “high” point, then point X will be a “low” point below point B (and vice versa).   See step 3 for a screenshot of the tool finding these swings.

Looking for Harmonic Pattern 9 Harmonic Pattern Analyzer

 

Step 3, Choose Point X:

This method may seem a little awkward at first, but once you understand what it’s doing, it’s very simple.  As you drag downward, point X is chosen to the left of A at the same price that you drag down to.  In the screenshot, the gray line originating at point A and sloping down to the right is the line you actually draw, the tool will add the connecting lines, the labels, and the potential reversal zone (point D).  In this example, it found a potential Cypher pattern and the support area this pattern creates.  Note, this class of pattern does not have a “suggested X” feature and typically a major swing is the best choice for point X.

Looking for Harmonic Pattern 10 Harmonic Pattern Analyzer

 

More Examples:

 

Next, continue to the AB=CD Symmetry Tool…

or…

Return to Chapter 4: neoHarmonics Toolkit…

 

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