Edmonton, Canada
Posts: 187 since Apr 2011
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One of the other things that the CD Intercept to D trade does, is that it forces verification and validation of Standard Harmonic Patterns. Either the CD Intercept to D will rise to its target level, or it will evolve into an AB=CD pattern, where essentially the old XA leg becomes the AB leg and the old BC leg becomes the CD leg.
Note: Using 61.8 for point B (retracement of the XA leg) seems to establish the above rule of thumb fairly firmly.
So, if I know the ratios of the initial Harmonic Pattern and I know that AB=CD calls for CD to extend to 127 to 161 of BC, then all I need to do is make sure that place a minimum range requirement on the original XA leg, in order to limit risk on the CD Intercept to D failure and to increase the probability for Stop & Reverse to BE recovery.
It is pretty simple and its a pretty cool way to do the Harmonics, when you stop to think about it.
