In this lesson we will be covering Harmonic Price Patterns. Harmonic Price Patterns help traders to spot where there could be possible retracements in trends, we'll also cover how you can link these patterns with the Fibonacci method.
The ABCD Pattern The ABCD pattern is probably the simplest of them all. To help you identify this pattern you will need the Fibonacci tool. Now for both the Bullish and Bearish versions of the ABCD pattern, the AB and CD lines are known as the legs and the BC line is called the correction or retracement line. If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach until the 0.618 level and the line CD should be the 1.272 Fibonacci extension of BC. after you have done this all you would need to do is wait for the pattern to be complete before taking a position. ABCD Golden Rules
The Three Drive Pattern
Three Drive Pattern is quite similar to the ABCD Pattern, however unlike the ABCD Pattern The Three Dive Pattern has 3 legs also known as drives (hence the name) it also has 2 retracement moves instead of 1. Just like the ABCD Pattern you will need to use the Fibonacci tool to help you. As you can see from the image above, point A should be the 0.618 retracement of drive 1, and point B should be the 0.618 retracement of drive 2. And drive 2 should be the 1.272 extension of retracement A and drive 3 should be the 1.272 extension of retracement B. After you have done assessed this all you would need to do is wait for the pattern to be complete before taking a position.
Three Drive Golden Rules
The Gartley Pattern The Gartley Pattern was developed by Harold McKinley Gartley during the 1930's, Gartley said that these patterns could help traders to asses what and when to buy in the markets. The Gartley Pattern is sometimes referred to as the "222" Pattern this is because it is found on page 222 of Gartley's famous book "Profits in the Stock Market". The Gartley Patterns are like the ABCD Patterns however they usually occur after a significant high or a significant low. Gartley Patterns are used to help traders jump into the current trend. A Bullish Gartley is shaped like an 'M' and Bearish Gartley pattern is usually shaped like a 'W'. Take a look at the image below to get a better idea of how they should look like. 

Gartley Pattern Golden Rules
Gartley Variants The Gartley Pattern has evolved over the years and many people have created their own modified versions, lets take a look at some of them: The Crab This pattern was developed by Scott Carney in the year 2000, which is fairly recent in comparison to when the original Gartley Pattern was developed. According to Scott Carney this is the best harmonic pattern because of how significant the reversal zones it highlights are. This pattern can provide opportunities to make a high rewardtorisk ratio trades because you can put in place really tight stop losses. Golden Rules of The Crab


The Bat
In 2001 Scott Carney developed another pattern, this one was named, The Bat. The Bat is defined by the 0.886 retracement of move XA as Potential Reversal Zone.
In 2001 Scott Carney developed another pattern, this one was named, The Bat. The Bat is defined by the 0.886 retracement of move XA as Potential Reversal Zone.
Golden Rules of The Bat
The Butterfly
The Butterfly Pattern was developed by Bryce Gilmore, the Butterfly Pattern is defined by the 0.786 retracement of move AB with respect to move XA.
 Move AB should be the 0.382 or 0.500 retracement of move XA.
 Move BC can be either 0.382 or 0.886 retracement of move AB.
 If the retracement of move BC is 0.382 of move AB, then CD should be 1.618 extension of move BC. Consquently, if move BC is .886 of move AB, then CD should be 2.618 extension of move BC.
 CD should be .886 retracement of move XA.
The Butterfly
The Butterfly Pattern was developed by Bryce Gilmore, the Butterfly Pattern is defined by the 0.786 retracement of move AB with respect to move XA.
Most charting platforms have Harmonic Price Pattern tools built in and so that is most probably what you'll be using to harness these patterns however there are certain steps you need to remember when spotting Harmonic Price Patterns:
Step 1: Identify a potential Harmonic Price Pattern
Step 2: Measure the potential Harmonic Price Pattern
Step 3: Buy or sell on the final move of the Harmonic Price Pattern
Step 1: Identify a potential Harmonic Price Pattern
Step 2: Measure the potential Harmonic Price Pattern
Step 3: Buy or sell on the final move of the Harmonic Price Pattern

