I decided to mark this post as an educational to show the community what I believe is the best way to trade harmonic patterns
. Many traders just open a chart and usings their fib tool scan for any pattern to complete and when they identify one they trade it ignoring the most important thing into a chart - market structure. Instead if you filter the patterns you trade, trading the ones which complete at key support and resistance
levels you will definately see your success ratio increasing dramatically. I personally use median line
analysis to define the levels where I will watch for a pattern completion. Using the same method I define my profit targets aiming the next potential ( support and resistance
) level where price may end its move. Aiming for the 0.382 or 0.618 is quite myopic as my times the potential a pattern is giving us is much much better.
In this NGAS chart, price has broken below a key level and in case it retraces to test the broken median line
, it will give us the completion of a bearish bat
pattern. Aiming for the lower quartile and the sliding parallel below it, we would get involved into trade with realistic targets which offer tremendous risk/reward ratio.
Let me know commenting below, your prefered way of trading harmonic patterns
I hope you found this post useful,