 Hello in this video. I'm going to be talking about harmonic patterns harmonic trading patterns within the forex markets and basically how to trade them how they occur the rules around them and so on so harmonic patterns combine geometry and Fibonacci ratios into a trading method that is Tries to be precise and based on the premise that patterns repeat themselves within the market So harmonic patterns basically attempt to predict future price turning points within the market Now there are a few harmonic patterns traded by traders But again in this video, I'm going to be only talking about two of the most popular and frequently occurring Harmonic patterns in the first harmonic pattern is the Gartley pattern. So the Gartley pattern was named after and discovered by gentlemen by the name of Harold McKinley Gartley who discovered this pattern in the stock market in and somewhere around the 1930s now this Peter was sorry his patent pattern was later adapted by traders in the in all markets including the forex market, so this is what the Gartley pattern looks like and It consists of it consists of four moves So you've got the x to a leg which is basically the x here To a leg you've got the a to b the b to c and the c to d which is down here and The moves are centered around Fibonacci ratios so When we have the x to a leg Right of a move as a for example the market moves from here to here now the a to b move This retracement move in the market should be at least sixty-one point eight percent of This move now if you don't understand Fibonacci and Retracements and exactly how they work then I suggest you watch the Fibonacci video We have in the video section To refresh yourself and to get to know about Fibonacci Otherwise, this is not going to make any sense to you so brush up on your Fibonacci retracement skills and Then come back to this video, but So the x to a move is your initial move from the low to the high and Your retracement move is the sixty-one point eight percent Fibonacci ratio now price Has to at least touch this sixty-one point eight percent Fibonacci ratio, but it cannot touch the seventy eight point six So it can't go lower than the seventy eight point six So once you get a retracement within the market that Hits the sixty one point eight you've got your a to b leg now Your B to C move is Should be a minimum of a thirty eight point two percent Retracement of the a to B. So if you were to plot a Fibonacci retracement tool and drag it from a to B then Prices as they retrace this a to B leg Price has to touch the thirty eight point two percent Fibonacci ratio And it cannot go above a sake as long as it touches the thirty eight point two It's fine, and it can keep going higher, but it cannot price cannot pass point a on the chart and then We have the C to D move now The C to D move as prices retrace this X to a leg You should have D should be 78 the seventy eight point six percent move of the X to a leg so as soon as Prices have hit the thirty eight point two and they start to Go past B If price does go past B Then what you're looking for is a retracement into the seventy eight point six from X to a Right because remember we had We had a retracement from You know X to a when we were looking for B And that was the sixty one point eight percent Fibonacci ratio And then when we're trying to find D We're looking for the seventy eight point six percent retracement from X to a so that's the main move and then we have the Traders will place a an order a pending order probably a by-limit order right here or Anywhere around the seventy eight point six percent Fibonacci ratio in an attempt to Capitalize on a reversal to the upside so this is a bullish Gartley pattern Right sub traders will attempt to buy at this D and put their stop-loss anywhere Sorry below X And what I'll do is now I'll get into the charts and see And show you how to plot the Gartley pattern on up on a price chart So this is the euro dollar 240 the four-hour timeframe chart now We have a Gartley on this chart now when you're getting used to Trying to see the Gartley it can be very confusing, but eventually once you get your Your eye in for it. It becomes second nature. So The more like anything the more your practice is The better you become at it. So What we need to do is have we have four moves So we have an an X to a a to B B to C and a C to D so that X to a leg So if we actually maybe just draw a Let's draw a Gartley pattern on here now if you have Trading view then you actually have a Gartley pattern Tool on here. It's called the X a B C D pattern. So what we want to see is if you pick that And this is just even even if you haven't got the the ABC the X ABC D pattern This is just for to get your eye in so we're just going to draw like almost like a template All right, so X to a a to B and that should come down to the 61.8 Roughly around there B to C should come at least minimum 38.2 and then a D completion at the seventy eight point six or somewhere around 78 79 we'll do right so that's the pattern that we're looking for in fact, let's Maybe draw this with a One of these tools right so X to a a to B and it'll come down to about there C to D Like that Right, so that is the pattern that we are looking for within price action. So We need to identify our X to a leg so we can see X the low To a high. Yeah, so we have That's some text so that's a So that's the X leg. So the X is right here The a Is up here So now we're looking for a retracement so our rules say that we should have that the a to B move because your X to a And then a to B should be At least sixty one point eight percent retracement of the X to a move So now we need to bring in a Fibonacci tool. So if you don't have this harmonic pattern And you're not using trading viewer You don't have that type of pattern on your trading platform You'd have to do it this way. So what you do is you get a Fibonacci tool from the low from the X and to the a and Then you look for the a to B move and the B has to touch at least the 61 point eight which it does but it cannot touch the seventy eight point six So it touches price actually retraces back down Touches the 68 so it's sixty one point eight percent ratio now we can confirm that as a B Doesn't touch the seventy eight point six. So Now We are on alert. So our first part is completed. So X to a a To be now the next move it says this the B C moves should be at least a thirty eight point two percent retracement of the a B move, but should not go above a so Now we're looking for the Fibonacci the move to retrace back up of this a to B move. So we've got a To be we've got our thirty eight point two percent Fib level right here and so that's fine and It doesn't touch it doesn't go with prices do not go above a so the B to C And this would be Considered the C That would be that now you can't really say that's a C leg until really prices break below B because prices could continue to go higher and higher and higher and go above a So you wouldn't necessarily plot this C until Prices break below B Yeah, so prices have to touch the thirty eight point two first before breaking below B now Once we've established that prices have gone below B We now look to see where the D leg is and let's get rid of this So we need to see where the D leg complete so the D leg should be somewhere around here and How that's calculated is D should complete at the seventy eight point six percent Fibonacci ratio of the X to a leg. So then we take our Fibonacci tool again and as you can see Prices once they broke Below B actually touched the seventy eight point six percent level right there So this would have been our D completion so C to D so right there and From this point once prices break past B Traders will go on alert and what they would do is they will set a pending order. So they will set You know a by-limit order at the seventy eight point six level Fibonacci level and They will put their stop-loss Anywhere below a so they would have this much risk and Then they will calculate their risk reward as you can see this made a two-to-one In fact, I think it went a bit further as well. Yeah, so it went further up as well and That's basically how traders will trade a bullish Gottlieb pattern. So if they're looking for a buy trade The X to a is the first to move up and you're waiting for the retracement to come down Place a pending order a by-limit order at the seventy eight point six put your stop-loss below X and then Wait for price To move possibly in your favor Some traders will wait for price action But the majority of traders will just place a pending order at the seventy eight point six level and Then wait for price to really once once prices have broken past be then it's time to place your pending order Price may not actually touch the seventy eight point six it might have just come shy and then gone straight back up, but the The good thing about the Gottlieb pattern is that it's It's a kind of set and forget strategy Whereas you can kind of plan ahead with a Gottlieb pattern. It's predictive It's definitely predictive in nature tries to be predictive Fibonacci is a predictive tool. So as it uses Fibonacci ratio It is Quite good for predicting. It's not it's not a lagging indicator like for example a moving average is so That's the Gottlieb pattern and now we're going to move on to the I'll give you an example of a bearish Gottlieb pattern So now we're gonna look to see if we can see a bearish Gottlieb meaning that we're going to be trading to the downside and trying to Short the market. So this is a the pound dollar 30 minute chart and this one might be a bit easier to see and We'll go over it anyway, just in case you can't see it. So what we need to look for is our X to a So we have the X And then we have an a so we have a low to a high Sorry a high to a low and Now we're looking for a retracement. So we need to see the a to b Move must retrace at least 61.8% of the X to a move so if we grab a Fibonacci tool from the high So the low and price Retraces and comes back exactly to That level right there You can see right there that it touches. So once it touches We've got a X to a a to be like right now. We're waiting for a A Sorry a B to see like right so the B to C should be at least 38.2% move of the A to B So we need to Have the A to B and it needs price needs to retrace at least to the 38.2% And It does you can see it right here where prices come down touch the 38.2 It can't go past the a leg So once we get a touch of the 38.2 of this a to B This B to C Now is we are on alert until price Goes above B. All right, so this would be B and We can't call this a C leg even though prices retraced to the 38.2 until Prices break and go above B. So this isn't a C leg until prices go above B So once prices go above B, we take the lowest price that C would have made which is actually here and then we look for 78.6 percent move of The total X to A leg. So let me just delete that Get the Fibonacci tool. So once prices break above B Now we're looking for a retracement to the seventy eight point six percent level of The X to a move. Yeah, so the C To D move should be seventy eight point six retracement of the X to a So prices We'll go from here To here and then the confirmed C leg is once price breaks above and then once it breaks above Traders will then be on alert. They might set an alert on their charting platforms once prices go above and then Appending order Entry that would be a cell limit order at that Price This would be your confirmed C leg Pending order at this price. So that would have been the 1.2899 level and once prices have hit that level So prices come up stop your stop loss needs to be placed anywhere above the X leg and then You can see prices actually, you know fell from there so that would be a Bearish got the pattern so bullish got the pattern is obviously a buy and you're looking for prices to retrace back down You know the X will start down here the low to the high and the bearish is You're getting into the short side and the X starts from the high and the A is to the low So we're now going to look at a second popular trading harmonic pattern So the next really popular pattern Harmonic pattern is something called the bat pattern now the bat pattern is similar to the Gartley Harmonic pattern, but has slightly different rules So the bat pattern first rule is that the retracement so the a to be retracement Needs to be 50% of the X to a move so as prices move up and you find a low to a high or a high to a low Depending on if you have a bearish back pattern, but this is a bullish back pattern. So as prices come down and they retrace Prices must at least touch the 50% And the Fibonacci 50% isn't a Fibonacci ratio But it must touch at least the 50% Level and retrace halfway if it touches if price touches the 61.8% then pretty much we have a Gartley pattern. So price can go down 55 58% But it just can't touch the 61.8% Fibonacci ratio so that would be the a to b leg retracement of the X to a and then Exactly the same as the Gartley where you have your B to C leg It needs to be a thirty eight point two percent Retracement minimum of the a to b leg. So if we take a Fibonacci Retracement tool and we drag it from a to b and we're looking for a retracement back up then the B to C C should complete at least touch the thirty eight point two percent Fibonacci ratio again Prices just like the Gartley pattern prices can't go above a so they can go anywhere above 38.2, but just can't go above a and once we have again a pullback Towards B and we get you know prices move past B then traders usually be on alert For a retracement the C to D leg and D completes at the eighty eight point six percent Fibonacci ratio and the eighty eight The eighty eight point six percent Fibonacci ratio isn't a popular Fibonacci ratio, but it is derived from certain calculations within the Fibonacci sequence and that needs to be The D needs to come down to an at least touch the eighty eight point six percent Fibonacci Ratio retracement level of the X to a leg. So if you pull a Fibonacci from X to a D needs to come down to the eighty eight point six percent Retracement level and then what traders will do is actually place a pending order a bilimit order at The eighty eight point six percent level and then place their stop-loss anywhere below X So we'll get into an example of a bullish and bearish Pat that pattern on the price charts So here we have the US dollar Swiss Frank currency pair on the daily time frame chart and We're looking for the bat pattern So we need to identify which is gonna be a bullish bat pattern So we need to identify a low to our high so we can see this move here was a low to a high So that would be our our X to a So this is X and this is a Now what we want to see is a retracement back down into the 50% level, right? So move a to be because extra aid and a to be this move down must hit the 50% Level of the X to a leg, but it cannot touch the sixty one point eight percent level Otherwise it pretty much becomes a garly. So we've got the X to a move and Prices retrace back into the 50% but don't touch the sixty one point eight Then we need to find the So that's the a to be move So a to be some 50% adjustment of the X to a move So then we need to find the B to see now the B to see needs to be at least 38.2 percent of the A to be right So the B to see needs to be thirty eight point two of the a to be and then we take the a to be Prices are clearly past the thirty eight point two and notice that it doesn't go higher than the A leg which is what we need as well We don't what we don't need is prices to go above if prices go above the a leg then it invalidates The pattern so prices stayed below the a leg now. We have a B to see so B to see and now We want to see Price the D leg Must be sort of C to D leg and the D must complete at at least the eighty eight point six percent retracement of the x to a set x to a and I'm going to have to add this Fibonacci in So we'll call this 0.88 Six we'll add this in right here Actually, let's give it a different color. Let's give it a so we can see That the C to D. So let's draw out our x to a a to be B To see and now we're looking at The D needs to complete at the Or at least touch the eighty eight point six percent Fibonacci level for traders to then Look to place their pending order and remember we don't have a D leg or a C leg until prices go below B so then you won't go on alert traders won't go on alert until prices here Go below B and then we have a potential C And then once prices hit the eighty eight point six Traders will enter a Pending order and this is a great example of why you should not necessarily always have really tight stop losses, so Let's put this over right so The X leg was here. That's the 100% level. So if you're putting your stop loss Right at the X leg you can see you would have been unlucky and would have been stopped out here Remember when placing your stop you always want to place it in an area where you think you will be Totally wrong on the trade. All right, so give your your stop loss enough room to breathe and As you can see if you did give it enough room to breathe currently The trade has gone In the intended Direction so as a lesson just make sure you don't put it, you know Just below here put it, you know, give it enough room to breathe and give it enough slack and Yeah, you can see that prices Continue to move higher. So that is the bat pattern if you do have and I'll get rid of Some of this if you do have the x2a and you are x2a a to b b to cc to d Harmonic pattern tool on trading view So you can use this tool and it plots out the actual Fibonacci numbers you can see the 50 where it says 55 it's 56.6. So that's the Fibonacci level It went down to even though 50% isn't Fibonacci, but then you've got the move From here to here. All right, so that will start to tell you Whether it's hit the 88.6 level here in this move You may have to if you're not sure about, you know, the Fibonacci move Just confirm it with the Fibonacci tool right here And you can see pretty much that I did hit the Fibonacci confirmed it. So That is the bullish bat pattern and we'll look to I'll show you a bearish bat pattern so here's the bearish Gottlie on the US dollar or Australian dollar US dollar currency pair on the daily chart and We have a high to a low So we have our X leg which starts up here and we got our a leg which is down here Now what we need to see is price Retrace back to the 50% level in which it does Here so it hits the 50% level so that's our a to be and then Once we've got our a to be We need to see We need the B to C leg. So the B to C leg is 50% I'm sorry, 38.2% of the a to be it needs to touch. So let's put the she matter of fact Let's put the notes on here So you can have a look so We've got the B to C leg needs to touch Be the 38.2% retracement of the a to be or higher or lower in this case. So It definitely touched the 38.2. So now that becomes the B to C leg So C is here C is the lowest point and remember we can't have C Go past a and now we're on alert Once prices go past be so now we need to see The C to D move needs to needs to touch the 88.6% retracement of the X to a move so X to a And once prices pass B Then traders have plenty of time to place their pending order at the 88.6% Control this in need to be be to see and then as prices make its way up We can start to see Price actually gets to maybe within a touch of it. It doesn't actually quite touch it the first time here But again, if you front run your orders meaning front running is basically just giving your Your trade a bit of extra Getting in a bit slightly earlier to count for the for the spread But it didn't matter anyway because even if you didn't it definitely would have touched the 88.6% Level right there. So it took a while on the on the daily chart But eventually it got there if you didn't get in here You would have got in there And we have the completion of the bat pattern We have the short position Would have been around there Stop above The actual highs anywhere above the high and as you can see When prices ping you in You've got a great risk reward and if you are using again the trading view and you're looking at the XABCD pattern tool. So you've got the X to a A to B that's 51 point. So it's 52 point one and then you can start to see prices do make the 38.2 from here. So it's 40 They go down to the 61 point Oh 61% and then you're looking for the completion at the 88 point six, which is around here So I hope you enjoyed this video if you do have any questions, please email me at info at trading 180.com