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Harmonic Trading
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Harmonic Trading

  #111 (permalink)
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Russell and NASDAQ leading

Should be interesting to see how many patterns if any complete the AB=CD.

Attached Thumbnails
Harmonic Trading-2010-03-03_094815.png   Harmonic Trading-2010-03-03_095058.png   Harmonic Trading-2010-03-03_095313.png   Harmonic Trading-2010-03-03_095535.png   Harmonic Trading-2010-03-03_100231.png  

Last edited by TraderJesse; March 3rd, 2010 at 08:38 PM. Reason: ScreenCaps too large
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  #112 (permalink)
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Some fun reading this thread, so I will post some of my charts as well:

Recommended reading on Fibonacci :

(1) Robert C. Miner: High Probability Trading Strategies - In my opinion the best book on the subject, of those I have read
(2) Carolyn Boroden: Fibonacci Trading - Influenced by Robert C.Miner, but not as accurate
(3) Larry Pesavento: Trade What You See - Easy Read, Focus on Visual Patterns like ABCD, Gartley, Butterfly and Three Push Pattern
(4) Constance Brown: Fibonacci Analysis - A different approach to Fibonacci Analysis. slightly oversophisticated and not always easy to understand, but worth reading
(5) Joe DiNapoli: Trading with DiNapoli Levels - An Oldtimer

Harmonic trading for me is about waves that superimpose and exhibit self-stabilizing or self-reinforcing characteristics. The golden ratio Phi has the property that Phi = 1 / (1+Phi). If wave 2 retraces 38.2% of wave 1, if then wave 3 has the same length as wave 1, it will stop at 161.8% of the first wave measured from the beginning of the first wave. If wave 4 also retraces 38.2% it will have retraced exactly to the end of wave1.
Some classical rules of trading, such as measured moves, resistance that becomes support and Fibonacci retracements and extensions reinforce each other, and you will find cluster areas as a result of application of these rules.

I will try to present a number of setups here that rely on Fibonacci Cluster. This works well on intraday charts, so I will start with CL today.

Three charts of CL:

The first one shows fibonacci confluence areas with standard settings. The lookback period is 300 days and the confluence zones displayed are extracted from 540 different Fibonacci levels, those in the vicinity of price action of today. The idea behind is not to take the last 2 swings that are visible on the chart, but take the larger swings that occured during a longer period backward. The indicator uses an internal zigzag to define these swings.

The chart shows 3 typical applications : Entry for the second leg of an ABC correction, retracement entry for start of 3rd wave, exit for a 3rd wave.

The second chart shows the various Fibonacci lines that add up to the confluence zones in detail, maybe explain this in detail later.

The third chart shows an optimized setting of the confluence lines. It is a cheated chart, because the minimum deviation of the zigzag and width of the confluence zones has been adjusted in hindsight to match the outcome. However the first chart is with standard settings, and on the second chart you will find that the lines have not been invented. Actually it is better to display fewer lines than more, because the fewer lines have a higher probability of causing a reaction. Therefore I do not use this on charts < 5 min, but mostly on 30 min or 60 min charts.

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Harmonic Trading-cl-04-10-30-min-08_03_2010-confluence.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-all-lines.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-cheated.jpg  
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  #113 (permalink)
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Solution of the puzzle of the previous post


These charts show the details of Fibonacci Confluence Zones by explaining the lines in terms of swing highs, swing lows, retracements, extensions, projections and alternates. You will find that the lines cluster, although five different methods have been used to put the concerto together. Clustering is made possible by the golden ratio. which is self-reinforcing and therefore found in nature as well.

Attached Thumbnails
Harmonic Trading-cl-04-10-30-min-08_03_2010-swing-highs-lows.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-retracements.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-extensions.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-projections.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-alternates.jpg   Harmonic Trading-cl-04-10-30-min-08_03_2010-concerto.jpg  
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  #114 (permalink)
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Hey Fattails,

Have you ever set up an indicator to show the "clusters" automatically using the FibRetracement code?

kz

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  #115 (permalink)
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What do you call "FibRetracement code"?


zeller4 View Post
Hey Fattails,

Have you ever set up an indicator to show the "clusters" automatically using the FibRetracement code?

kz


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  #116 (permalink)
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One chart that does not need any comments

Confluence zones for 6E today on a 30 min chart.

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  #117 (permalink)
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6E Held the Bottom Zone


Fat Tails View Post
Some fun reading this thread, so I will post some of my charts as well:

Recommended reading on Fibonacci :

(1) Robert C. Miner: High Probability Trading Strategies - In my opinion the best book on the subject, of those I have read
(2) Carolyn Boroden: Fibonacci Trading - Influenced by Robert C.Miner, but not as accurate
(3) Larry Pesavento: Trade What You See - Easy Read, Focus on Visual Patterns like ABCD, Gartley, Butterfly and Three Push Pattern
(4) Constance Brown: Fibonacci Analysis - A different approach to Fibonacci Analysis. slightly oversophisticated and not always easy to understand, but worth reading
(5) Joe DiNapoli: Trading with DiNapoli Levels - An Oldtimer

Some classical rules of trading, such as measured moves, resistance that becomes support and Fibonacci retracements and extensions reinforce each other, and you will find cluster areas as a result of application of these rules.

Hi Fat Tails:

I've read the Larry Pesavento book and a boat load of pdf's found by doing a google search, many which are repetitive. Pesavento's style fits me so I have system modeled around it with variations. I do have Miner's books next on my list. I''ve skimmed through all of the other books at the local book store and didn't find Boroden's or Brown's books that appealing. I do want read DiNapoli's at some time. I've read Scott Carney ebook, The Harmonic Trader, it is very similar to Pesavento's stuff.

I'll reconsider the Boroden /Brown books and maybe get them read this year. There is an infinite number of ways to trade and anything I can add to my trading toolbox to make me a better trader and more profitable trader is well worth investigating.

And your bottom confluence zone held on the 6E chart. By 5 ticks , got to love it when it all works out as laid out.

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Harmonic Trading-2010-03-12_123038.jpg  
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  #118 (permalink)
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Hi TraderJesse,

you are absolutely right. I find the confluence zones particular reliable if combined with

- Keltner Channels: Fibonacci lines outside Keltner Channels are very effective

- Volume Analysis: High Volume Churning confirms the start of an accumulation or distribution phase near those Fibonacci Lines

The black volume bars below are High Volume Churn Bars, and they are often (but not always) predicting a reversal.

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Harmonic Trading-fibonacci-churn.jpg  
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  #119 (permalink)
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came across this market warriorsoftware, it scans txt file to look for gartley pattern
Mikula Forecasting Company
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  #120 (permalink)
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I have a problem with this chart:

(1) It reads Gartely pattern on top, but butterfly below, these are two different patterns.

(2) It is not a Gartley pattern, the specific two-legged ABCD correction never occured.

(3) The butterfly shown is mere fiction and never happened. If you like I can draw potential butterflies in any chart. One of the dangers with pattern recognition is to anticipate them, before they occur. This one never occured. A butterfly is only bullish after completion.

(4) If you look at the daily chart of CTXS you will find that a trend line simply was promoted to a trend channel line as an established trend weakened.

(5) Bullish Gartley and Butterfly patterns typically occur after a downtrend and are reversal not trend continuation patterns as this one.

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cory View Post
came across this market warriorsoftware, it scans txt file to look for gartley pattern
Mikula Forecasting Company
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