Guide On Trading Crypto Currency

Guide On Trading Cryptocurrency

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 Guide on Trading Cryptocurrency

Table Of Contents

How to approach trading?

Practice before trading

Trading is not everyone

Learning How Trade Or Successfully Print Money Is A Lifelong Skill

Compounding Gains

Risk management

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How to approach trading?

This person is extremely ill and you are the ONLY ONE person to help them.

You have no prior knowledge or degree of anything to do with that subject. You

have a high chance of ultimately failing in this situation as you have yet to learn

and practice this knowledge to help this extremely ill individual. You statistically

have a 96% chance of this person dying if you have no knowledge on any medical

subjects or theorys. This person has a high probability of dying as 24/25 they will

as your win rate is only 4%.

Five years later you are put into the same situation. Another person is

extremely ill and you are the ONLY ONE who can help them. During those 60

months of the first situation you have attended a college to become a doctor. This

college allows you to go at your own pace and you might take longer or shorter to

finish at this college depending on how long it takes you to retain the knowledge

and prove it. At college you had to pass multiple exams to prove yourself before

getting a job or helping someone. You spent 1000s of hours studying and

practicing to get your certificate. Only 4 out of 100 people pass this college and go

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onto becoming a doctor as it requires you to be able to outperform and work

harder than the other 96 students.

You have now acquired the knowledge to help this person as you did not

before. You are able to study the person who is extremely ill and diagnose the

issue as you have prior knowledge of it that would have been impossible to see

without learning and retaining it by practice. The person has the same condition as

before but you realize there is a 80% chance that they will keep their arm but you

have a 100% chance that they will survive as when you did not have this

knowledge before they had 96% chance of death. You were able to save them and

only risk losing an arm because you have now acquired the knowledge of how to

not only save them with 100% certainty but also on how to have a higher chance

of saving this arm. This practice and also this checklist that you have mentally and

physically helped you with the ability to succeed in that high pressure situation.

Practice before trading

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Trading has many similarities when comparing it to any high pressure job that

requires many hours of studying and practice.

- Practicing and retaining this knowledge of trading takes many hours if you

want to be successful. Likewise becoming a successful doctor takes many

hours as well.

- Traders need to be able to perform under high pressure situations as the same

can be said about a doctor. If there will be success you must acquire and

retain the knowledge by practicing and studying.

- Understand that you have time on your side. You have the ability to take as

much time as you can and follow these guidelines. This is a skill that to create

success in it comes down to two main ideas being the amount of time you can

put into it and knowledge that you retain/apply.

100 people will go to college to become a doctor and out of the 96 people only 4 of

them will finish this. Being a successful trader has the same statistics as going to

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college to become a doctor as only 4/100 of you currently reading this will be

successful trading statistically. As we talked about before, this comes down to time

and knowledge in both cases but I will go over more in depth of what is likely to

increase your odds.

- Trading requires much patience to be successful just as any other highly

competitive skill set in life. You might not be a particular patient person but

you will need to be patient in the learning phase all dependent if you are able

to pass the test which is successfully paper trading live price action

- Commitment to not only many focused hours of studying in trading is key but

one of the most important ideas for starters is creating a checklist. Do not

overlook the idea or the simplicity of the checklist when trading and this can

be mental or physical (physical will help more). Staying committed to a set of

rules and guidelines IS EVERYTHING in trading and the main reason behind

people failing is they do not understand the rules or are not committed to the

process it takes as it might be very slow or dull.

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Learning How Trade Or Successfully Print Money Is A Lifelong Skill

As a successful trader you are gaining an ability that can benefit your life from

a financial aspect. This is not something you rush into and learn how to do

successfully without knowledge, you must also understand how long you have to

study this skill and how long it takes you to have a complete understanding of each

subject.

This knowledge skill set is something you can use for the rest of your life and

has been around for 100s of years, yet many fail and quit. If you rush into trading

with little practice and knowledge you are only hurting yourself and will regret not

putting more time.

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Compounding Gains

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Making 1% a day with $1000 you have the ability to turn it into $1,426,587.91

through compounding as your portfolio increases 1% daily. Making 1% a day is

incredibly hard to do consistently which needs to be understood but with even

smaller percentages over a monthly period of time instead of daily will continuously

grow with proper risk management.

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The amount of percent aim to make each day or month will depend on your

trading style and back tested data from previous trades of a strategy. If you do not

reach your goal for that day and lose for example 1%, this does not mean to trade

more as this will hurt you. Do not trade for that day or take smaller trades or you

are just risking more loss in the process.

The most important mental aspect to compound interest is that your goals for

that day or month will never be met consistently and that is okay if you do not reach

your goal. Trading is not about how much money you make but rather how much

you can avoid losing.

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Trading Styles

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There are multiple different types of trading styles to choose from and you

need to figure out which one suits yourself best. It is important no matter

what type of trader you aspire to be that you still understand the concepts of

TA that I will go over.

Scalping - Short term trades daily trades that are extremely fast paced and a

test of your ability to read market structure and trends in a short period of

time. In and out of a trade within a few seconds or minutes, might look easy

but you need quick reaction time as the market structure changes very

quickly.

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Intra day - These trades last between a couple of minutes to a couple of hours and

you are focused on the best moves in a particular trading session. You do not hold

onto trades past session closes.

Swing Trading - Great for traders who don’t want to spend that much time in front

of a computer but you will need a lot of patience as these trades might last 1 day or

1-2 weeks.

Position Trading - This is the long term trading style where these trades can last up

to 2 weeks, 2 months or even 2 years+.

Unless you plan to never sell your position you do not have a trading style.

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Risk management

If you want to be successful in the long term trading and investing overall, you need

risk management.

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Risk by definition is you potentially exposing yourself to danger in trading the danger

you face is a loss which no one enjoys.

A lot of unexpertraders can not accept a loss or do not know how to handle losses.

They can happen very quickly and can happen more frequently under certain periods

of time or in other periods of time they might be less frequent.

It is incredibly easy for you to lose all of your money in a short period of time. Most

people who have been trading for at least a couple of months, know this to be true.

Managing risk is THE MOST IMPORTANT concept in investing. You are planning ahead

of time by managing the risk of the probability that you are going to encounter some

type of loss and it is necessary to have a plan for that situation.

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How to prepare for losses

Such an unfamiliar concept for the average mind of a retail investor.

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Prepare for the worst and hope for the best.. as preparation for both

outcomes is the reality you must live in as an investor to fully reach a state of

consistency.

Trading is all about probability and sometimes the best traders or hedge funds

will still occasionally experience consecutive losses. That is the truth.

When most people are just into trading or investing you are stuck in the

mindset of only thinking about the gains that you will make. The knowledge or

advice is not online for them to use.

This is why such a small amount remains successful as this mentality plagues

99% of the new traders, it’s not until the one of the only variables we can not

control which is time changes this. You will either lose or quit with the mindset

of totally disregarding preparation for losses.

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To those who are patient and take this advice into practice I give in these

books before entering the market, I can tell you with a certainty that you will

have a much higher probability of success in this market or any market.

The first question you must always think about is not if you are going to

experience a loss but rather how much are you going to lose. If you are going

to win or lose a trade is not in your control. How much you are willing to lose

is in your control.

Decide how much you are willing to risk before you take any trade (stop loss)

We have a $10,000 account and this is our first live trading account.

We know we are new and have still much to learn so instead of risking 10%,

20%, 30% we are only going to risk 0.5%, 1%, 2%

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Let’s say you lose 5 trades in a row and you are risking 1% every trade. I

know there are fees included but we will just say you lost $500. You know the

exact amount of money that you risked every time.

Let’s say you risk 1%, 5% , 15%, 30%, 60% in 5 losing trades. This happens

way too often to traders that are new. You do not know when that losing

streak or win streak will come.

New traders do not prepare for a losing streak and most likely do not have a

strategy at all. Also they most likely have not backtested or you did not

prepare enough before entering the market as there is MANY hours of practice

and knowledge that needs to be involved for your success.

Take your strategy and gather enough data from it (100-200+ trades) using

some sort of software. All of you are able to calculate your probability of

encountering consecutive losses

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The majority of traders are in the winning percentage of 30%-70%.

Let’s say you have a 60% win percentage, you still have a 1% chance of 9

losses in a row…

How many of you could lose 9 trades in a row and have enough confidence to

not change your trading strategy?

A lot of new traders don’t even need 9 losses in a row to change their

strategies… 2, 3, 4 they will be on their 3rd strategy.

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If you ignore risk management and you are risking 20%, 30% of your portfolio

every trade you are not going to survive a 4. 5. 6. 7. 8. 9 loss streak.

A lot of new traders will quit or take a break from trading until they save up

enough money and ignore risk management. They will keep making the same

mistake.

This is because they are unaware of the fact that probability works not only

for wins but losses as well.

Even with 90% successful trades you still have a 5% chance of losing 4 trades

in a row.

Someone who risks 0.5%, 1%, 2% of there $10,000 will receive that 10%

drawdown but you will live to trade another day, learn from these experiences,

learn from experiencing a losing streak and that they do exist for all traders

and also build trust in their strategy as you progress along their journey.

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95% Waiting 5% Execution

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- You will spend at least 95% of your time studying the market creating

your trade setups and only at most 5% of your time executing orders.

- You are going to be mainly backtesting, studying, learning and waiting

for trade setups

- If you find yourself having to enter a trade every time you get the

chance or or without preparation you will not last long.

- Your trading plan is if a, b, c and d happen in a chart you have a x

percentage to win this trade setup and you would have back tested

these set of variables many times.

- Your goal is to fully understand the way a market moves in patterns but

also learn how to identify and create trade setups ups by identifying your

a, b, c and d variables that will give you this high probability trade setup

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- Trading will be extremely boring if you do not enjoy math, have no

patience or do not like learning something new. If you do not excel in

these 3, there is still a chance for you to adapt as we all have the ability

to adapt as humans.

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Risk to Reward (profit factor)

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Risk vs Reward is a simple concept to understand but a hard concept to put into

theory. Essentially you are going to want to calculate before you enter a trade not

only what you are willing to risk but also what percentage you are aiming to

achieve. This should be calculated out before every trade you enter but it can be

changed as price action, market structure and the order books are the only

exceptions to a possible change. Do not let your emotions cause greed.

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Triangular Fractals: The infinite pattern of trading

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Fractals are a geometrical pattern that keep repeating over multiple time

frames infinitely. These large triangles are built out of smaller triangles, these

small triangles are built out of smaller triangles etc. When we zoom in we see

an infinite loop of triangles. This relates to trading because if I were to ask you

what time frame a chart I would get a lot of different answers.

The same chart patterns keep repeating on multiple time frames because the

market cycles which are caused do to supply and demand repeat on every

time frame.

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1st chart: 1 minute

2nd chart: 1 week
3rd chart: 1 second
4th chart: 1 hour

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The repeating patterns of Supply and Demand keep repeating over every

single time frame. No matter what time frame these same law

This is why on a smaller time frame you can have a bullish trend but if you

zoom out you can be inside a bearish trend and if you zoom out even further

you can see that this is inside a range.

There are only three ways you can identify what overall market structure is in.

These three types of market structure are an uptrend, downtrend or range.

Once you are able to realize that the market moves in these same patterns

infinitely, you will make more sense of the chaoss.

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SUPPLY AND DEMAND ZONES

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- Supply and Demand zones are support and resistances but are drawn in a
different way which can give you quite an advantage than the support and
resistance line

- This gives you a larger zone to trade out of as the start of a large breakout
or breakdown is often going to show itself somewhere in this zone which
gives you a better opportunity to make successful trades then the average
support and resistance trader.

- Supply and Demand zones can be used with support and resistances as
you can still draw them on your chart but differ as they are not just a
singular line but a zone for price.

- When you make supply and demand zones you will avoid many of the
trades that you will have a more important price point than a support and
resistance

How to draw these zones?

- The first bearish candle after we create a decent downtrend or sell off in
the market is the supply zone meaning price has a higher probability sell
off and acts like a resistance

- The first bullish candle after the decent size uptrend is the demand zone
this is where price has a higher probability to be bought as it is in
demand

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- You are likely to see wicks and engulfing candles in these zones

- You know a possible continuation or reversal of that zone is likely to begin when

one of the supply or demand zones is broken through with heavy price action.

- Support becomes resistance and resistance becomes support when breakdown

or breakout does apply to supply and demand zones as well.

How to trade support and resistance in supply and demand zones?

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In reality you do not have an idea what support or resistance level will cause the

reversal. You should not limit order and enter a trade with these specific setups alone,

one option that will always apply when entering just about any day is to see a price

action signal.

An example of this is an engulfing candle that breakers out of a demand zone and

shows market structure has a high probability of breaking.

After seeing the engulfing candle form you could have entered a buy with your stop

loss placed below the nearest support level or you could have placed your stop loss

at the edge of the demand zone itself. Stop loss placed at the edge of the

supply/demand zone is a better success rate as it will save you from candles wicking

you out.

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Retail Traders are meant to lose

- 90%+ of crypto currency is owned by 1%. Crypto has a very low market cap

and extremely high volatility compared to other markets which essentially

means it is easily manipulated. This is why supply and demand zones are

extremely important to learn as they form in every market including crypto, but

they are extremely more violent as the market is more volatile due to the low

market cap and high volume when compared to other markets.

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- You must be very careful when trading Bitcoin and especially altcoins as they

tend to have spontaneous supply and demand zones as crypto is easy to

manipulate.

- This does not mean supply and demand zones will never hold true in crypto but

the tough reality of crypto technical analysis is it doesn't take much supply or

demand to break market structure. This is where these top 10% can seize the

opportunity of easily taking advantage of those who trade in these low market

cap assets as all they have to do is go against market structure with a small

amount of their portfolio.

- Even though there are many times where supply and demand zones do not pan

out in crypto, with an experienced understanding of price action, strategy and

most importantly risk management these are a very beneficial concept.

Why do Supply and Demand zones form?

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- Larger portfolios do not have the opportunity to place one position in the market

when they see fit. They can ultimately make a price whatever they see fit which

is whatever will make them money. Supply and demands form as this is the

place where these large investors are filling there positions and you can tell that

by the large move that follows after.

- Supply and Demand zones reappear as many of these large traders have too

much money as we said before and this means that most situations when price

comes back to an area that they placed a position at they are likely to place

another position or sell their position. This is why you see support and

resistance.

- Depending on how much supply or demand there is from retail investors is

normally the reason why price will either respect these zones or reject them.

- Price action can be a visual way of determining how much supply and demand

there is in a certain market and is one of the most important concepts as a

trader.

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- The order book is also extremely important as this gives you real time data of

the current orders (supply and demand) at the specific time as well. I have a

book on that topic which should be read last.

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You will often see these supply and demand zones from higher or lower which

sometimes leads to an indication of the start or continuation of a upwards or a

downwards move.

There is more demand or buying when price was reaching the previous demand

zone. Price reversed upwards at a higher level and made its move up in the example

below.

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Supply and Demand single candles (stop loss hunt)

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- Crypto is a dangerous asset to trade for the untrained. You will often see

supply and demand zones brake structure but then reverse the next

candlestick after…

- Crypto is so volatile due to the fact that there is much “trading” taking place.

This creates countless opportunities for these large traders to predict your

next move with the goal of taking your money.

- Price will break a supply or demand zone with a large candle which creates the

illusion to enter a trade. In the example above, there was not enough demand

for price when it broke through the supply zone.

- In the example above why did this supply zone not work and price was

incapable of making a run higher after it broke through?

- This is called a single candle supply or demand zone. This is done on purpose

to get people to get into their trades early.

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- This is one of most common illusions that large traders will create to take your

money.

- How do I know if it actually is going to brakeout or not?

- There are many ways you can better prepare yourself for these situations that

I will cover BUT you will never win every trade with these concepts. These

concepts in practice will create a more consistent return but that is only with

enough practice.

- Can you be successful trading?

- You all have been given the ability to learn. Most people in life are unwilling to

accept that in order for them to learn they need to study harder and work

harder in life. In trading, it is the same thing as finding success in lifeline for ,

if you are more determined can work harder

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Swing High and Swing Low

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As a trader, your goal is to locate turning points in the market. This is just a supply

and demand zone but on a shorter term scale.

Swing highs and swing lows are turning points on a shorter term basis. They show the

oscillation of the market going up and down at the exact levels in price where it turned

into the opposite direction.

Swing highs and lows show these key turning points in the market and act as support

or resistance.

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They can also be used to identify trends as if you have multiple swing highs in a row

you are bullish.

Likewise, multiple swing lows/highs in a row is bearish.

If you do not have 2 continuous higher/lower swing highs and higher/lower swing

lows neutral.

The market is in the picture above.

Example of a BULLISH swing high swing low

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The higher swing highs are used as resistance and in an uptrend you continuously

breakthrough swing highs.

When you first create a higher swing high it acts as resistance until you create your

higher swing low.

Then price breaks through the previous swing high and then falls creating a higher

swing low. Now the swing high turns into a resistance and the swing low turns into

support.

Example of a BEARISH TREND swing high and low

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The swing highs are used as support and can, in this case, represent a downtrend if

you continuously break through your support or swing low and price is unable to break

out of the swing high.

When a swing low is created it acts as a support then becomes a resistance.

Price is unable to reach the previous swing high and this now turns into a zone of

resistance as price does not come back there and is able to break through the previous

swing low which now turns into support.

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Accurate trendlines (Trendline Supply and Demand)

I am sure many of you are familiar with trendlines as they are a very common way of

identifying trend in a strategy which can be used successfully as a diagonal support

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and resistance can be used as great entries.

There are certain rules which will make your trendlines have a higher probability of

success just like supply and demand levels. I draw my normal trendlines first always

then I add a zone around them as you will see later, but I always make sure to draw.

Trendlines are one of the cornerstones to market structure and price action. You must

know how to follow trends and define them on your charts. They are diagonal support

and resistance levels

You want to track trendlines with 2 touches but confirm them as an active trendline

with 3 touches, you can still use 2 as entries but trade at your own risk knowing that

is a lower probability trade.

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- Trend trend lines as if they were areas like demand and support

- Price is a very dynamic concept. You have volatility and momentum that can

really affect price moves in a significant way. This is especially true when we

look at trendlines. When traders are trying to place a trade at a very obvious

price level, the professional traders know this and they will do their best by

trying to let price spike to the level or makit it turn before actual level. You need

to use them as zones which have more absorption than just a single price.

Valid Higher Probability

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Invalid Lower Probability Entry

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- The lows used to form an uptrend line and the highs used to form a downtrend

line should not be too far apart or too close together. The most suitable distance

apart will depend on the timeframe, the degree of price movement and personal

preferences. If the lows and the highs are to close together the validity of the

reaction low may be in question. AN ideal trendline is made up of relatively

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evenly spaced lows and highs.

- Before a breakout occurs, the price tends to cluster around the trendline and

the time in between the consecutive touches tends to become shorter. If the

market repeatedly tests a trendline many times over a relatively short period

and the price cannot drift far from that trend line, then a breakout has a higher

probability

- As the steepness of a trendline increases the validity of the support or resistance

level decreases. A steep trendline is the result of a sharp advance over a brief

period of time.

- The angle of a trendline creating so many sharp moves is unlikely to offer a

meaningful support and resistance level. Even if the trendline is formed with

many valid points, attempting to play a trendline breakout will often prove

difficult

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- Drawing a supply and demand zone also gives you the ability to see fakeouts

when the trendline is broken through. When you see a candle break a trendline

but it closes still following the trend, this gives you the ability

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Trends and ranges

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- The chart can either be in a sideways trend, uptrend or downtrend.

- Uptrend- Price continues to break the previous highs and does not go

lower than the previous lows in the trend, it makes higher highs and

higher lows.

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- Down Trend- Price continues to break the previous low and it does not

push above any of the prices

- Sideways- Price stays in a resistance and a support level and creates a

higher high/lower low, or a lower high/ higher low

- uptrend= 1st closer higher than the last movements high e 2nd close

higher than the last movements close

- downtrend= 1st clost lower than last movements high 2nd close lower than

l;ast movements low

- sideways= 1st close it either not higher than last movements low or high

2nd moves close is the opposite of the 1st showing consolidation

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- You want to see 2 consecutive movements to confirm an uptrend( 2 higher

highs/ higher lows in a row), downtrend(2 lower highs/ lower lows in a

row) or sideways( 2 neither in a row)

- The market range can be different depending on what time frame you

are looking at and how far back you are calculating the range but every

range has 3 key levels being the supply zone, demand zone and 50 level.

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- You are looking for supply and demand zones where price has been

tested multiple times in the middle, top and bottom

Ranges are extremely important as bitcoin on the daily time frame has been

ranging 70% of the time. On the lower time frames you will find these ranges

more often but getting a sense where we are on the lower and higher time

frames is crucial.

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You want to trade a ranging market conservatively at times but you need to

know when to be aggressive as this is how you excel when trading ranges.

Originally employed by floor traders on equity and futures exchanges, they now are most commonly
used in conjunction with support and resistance levels to confirm trends and minimize risk.

Pivot Points

Vwap and Volume Profile

Imagine if price traded in a range or trend you could calculate from the

day or week before?

This is indeed possible and is quite an easy concept for you to make a

successful strategy out of.

The market does not just have one or two of these levels in price where

you can have a high probability of seeing a large breakout or reversal but

the market has many that I will be covering in this section.

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I am putting these 4 categories in one concept as they are all very

important to market structure and show different data.

Each one of these can be used in a strategy alone or together as they can

all be successful with the right risk management, analysis of market

structure, creation and backtest of a strategy. Trading is a very easy

game once you can find and understand the ranges in price that have

large movements off of them. That is one of the most important things

you are looking for as a trader.

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Daily/Weekly/Monthly Highs and Lows

https://www.tradingview.com/v/XDhZo5JO/

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Daily High and Daily Low

Everyday prices have a high and low on any chart. These highs and lows show not

only support and resistance but also trends. This is how markets work.

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Daily High and Low Practice

1. Evaluate if the market is trending or ranging by looking at the past individual

day or more finding the highest high and lowest low of those past days

2. The most recent days highest high and lowest low will most likely be the

important resistance and support

3. If in a down trend (past days have had lower highs and lower lows) and

breaks through the previous day’s high treat the past days highs as resistance.

If in an uptrend and price breaks through the previous days support treat the

previous days supports and resistances as resistance.

Supply and Demand Daily High and Low

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When you create these highs and lows of that day this was not just an insignificant

move down but this is the move that everyone that was in the market agreed upon.

The entire world for that day came together and agreed that the price would not go

higher or lower than those two prices.

These highs and lows of the previous day tend to see large movements off of them

the following day the market has to decide if this price will have the large movement

again in the same direction or not.

The past 3 previous days can tell you a lot about the market in terms of strength.

Let's say the past 4 days the market at the end of each day closed at + 1%, 3%,

5%, 0%.

The past highest high of that 4th day shows that the market lost its bullish

momentum and there could be a possible reversal the following day.

When price trends you will have it slow down and become weak as this impulses and

corrections or pumps/dumps and people either taking profits or leaving the market.

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You will begin to notice how these past daily highs and lows are crucial points where

the market will break out or break down and this will happen time and time and time

again.

Studying risk management, price action analysis, strategie checklist, market

structure concepts, and backtesting, you will quickly realize that you can be fairly

consistent with profits trading this daily range alone.

Weekly High and Low

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This important level in the market is the same concept as daily high and daily low

but just on a weekly time frame. We will be adding both of them together in this

section.

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This example above is from the same week as the daily high and low example. The

red line is the last weekly high and the green line is the previous weekly low.

On the past 3 weekly highs and lows you can see that we are obviously in an

uptrend that is strong due to the fact that the previous low is higher than the week

before hand and the previous high is higher than the week before hand.

This gives you the opportunity to understand the larger trend as it is very important

on what price might do on your shorter time frame.

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As you are more likely to have a breakout or breakdown off a daily high or low if it is

also close to a previous weekly high or low.

These weekly highs and lows tend to act as an even stronger supply and demand zone as they are

apart of a larger trend or range.

Weekly Highs and Lows Checklist

1. Evaluate if the market is trending or ranging by looking at the past individual

weeks or more finding the highest high and lowest low of those past weeks

2. The previous week's highest high and lowest low will most likely be the

important resistance and support

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3. If in a down trend (past weeks have had lower highs and lower lows) and

breaks through the previous week's high treat the past days highs as

resistance. If in an uptrend and price breaks through the previous days

support treat the previous days supports and resistances as resistance.

Monthly High and Low

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The monthly low is even more important than the weekly and daily previous highs

and lows as it can give you a longer view on the market.

From the monthly high and low view on bitcoin you had a very clear perspective that

we had lots of support where the red circle was as the closer the highs and lows get

the higher probability price has to reverse as this is showing a strong support.

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Daily Session Range

This is when the London's market closes and the New York market opens. You can

do this for other times but I am just going to be focusing on this one as it has the

highest success rate in my experience. This is one of the most important

ranges you can trade where you will find these large movements in price.

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How to trade this?

All I am doing is treating this range that is pre calculated for you everyday in the

script above as a crucial support and resistance or range. You will need a better

understanding of price action and form your own stop loss and price targets for

when you are going to take profits.

95% of traders do not know this exists.

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Daily/Weekly Sessions opens (US London Asia)

https://www.tradingview.com/chart/e99ggfrw/

Not as important as the NY and London range but is an important supply and

demand zone.

The stock market is open during certain hours. The exchanges are closed at night

and on weekends. Cryptocurrency exchanges work around the clock, seven days a

week, and on holidays, even during every holiday. To trade cryptocurrencies, you

need to have nerves of steel; otherwise, you will lose sleep.

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Pre market can show you a lot about what price is going to do before it opens.

When the market does open after pre market for each session you will find similar

patterns of where price will trade within this session range that is created.

The indicator has quite a lot of noise but will show you how these sessions trade for

those who are unfamiliar with the concept. Every day a market opens on the daily

and weekly time frame it will draw a line.

You will see these opening lines be used as supply and demand zones as this is

when these markets choose to close open price at.

You will also see on a daily/weekly basis that these markets will fake out price by

sending it lower or higher than they opened. They will bring price back to the

opening price most times.

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You can identify if we are in an uptrend, downtrend or range as well, if we are

making higher highs, lower lows or not from previous opening prices just like the

daily highs and lows.

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These act as daily and weekly supply and demand zones where large amounts of

money are put into a market at a certain level for each session. The weekly open will

more or less have more impact then the daily but you can use them together to see

where the market next move could be. Past 5 daily session opens are losing

momentum and we are

In this example below we can see the london weekly session was acting as a supply

zone while the New York weekly open was acting as a demand zone in this range.

On the daily sessions of both of these markets momentum was increasing as the

daily sessions were creating higher highs on the opens. The weekly London open

has a higher probability chance of having a break out as we look bullish on the daily

time frame with sessions creating higher highs.

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In this example below you can see that price fell through the weekly london open as

this was not strong enough to hold price which can give you a bearish outlook

before the london daily session opens.

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You have bearish price action confirmation that price action with the engulfing

candle that breaks down at the opening price of the London daily.

This shows that there is selling pressure here and also because the London daily and

Asia daily were both slowing down in momentum on the daily you could have had a

high probability of seeing a breakdown.

Not only did we reject the London daily but we also rejectected and fell through the

Asia daily open.

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Do not get faked out

You will see prices revert to the open of the daily and weekly. You can trade these

moves with consistency when you have many hours of practice studying them and

also studying the order book (crystal ball).

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Session checklist

1. Evaluate weekly open momentum. Is it in an uptrend, downtrend or ranging.

2. Evaluate daily open momentum. Is it in an uptrend, downtrend or ranging.

3. Treat weekly as stronger supply and demand zones then the daily

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4. Use price action and market structure in conjunction to evaluate and enter

trades

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Pivot Points

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https://www.tradingview.com/v/6uviIKSP/

There are many ways you can trade pivot points and many different calculations of

pivot points. I am going to be going over only two of them as these are the two that

I have found the most success when trading.

(Mark Fisher - The Logical Trader 2002)

https://www.google.com/books/edition/The_Logical_Trader/4xFo6Pnb

6JsC?hl=en&gbpv=1&printsec=frontcover

There was one powerful quote from this book that was made by a large trader on

Wall street... (every strategy I go over is used by large traders)

This quote says “ I can have 64/65 indicators give me a buy signal but if this does

not, I am not taking the trade”.

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Pivot points are important but there are many rules and other strategies that I will

not get into as most of them are not too useful from my testing in crypto.

Take that quote with a grain of salt but it is still a concept where you can really

benefit from if you implement it into a strategy.

The two pivot points I will be going over are the Camarilla pivot points and the Vwap

Carmilla pivot points on the daily and weekly time frame. I have made many

strategies with pivots and in crypto have found these in particular give me the best

result as I am taking advantage of cryptos volatility.

Camarilla pivot points

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Trading view has a built-in version of this indicator if you add it in go change it in

the settings.

Pivot points have 4 resistances, 4 supports and 1 pivot point or middle of the range.

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The strategy that works well with crypto is looking for prices to have a large breakout or

breakdown after it pushes through the S4 and R4 levels if market structure and price action show

confluence.

I am also looking for possible reversals from the R3 and S3 levels back to the pivot point if price

action and market structure show confluence.

I am mainly using this on altcoins as they tend to have a higher volatility which leads to larger

breakouts and reversals.

Daily Camarilla Pivots

Weekly Camarilla Pivots

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I am only using the R4 breakout and S4 breakdown with the weekly.

Vwap Camarilla Pivot points

https://www.tradingview.com/v/6uviIKSP/

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Daily

This is using vwap to calculate the camarilla pivot points. I have found more success

on breakouts and breakdowns with this as because it is using vwap you will see price

and pivots become tighter as the volume is lower making it easier for a breakout of

breakdown to happen.

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Weekly

On the weekly I am not only trading the R4 and S4 but I am also trading the vwap

weekly open which is used as an important support or resistance level. The weekly

open is that yellow line.

Vwap Camarilla Pivots Breakouts Risk to Reward

- I only use the vwap Camarilla pivots in my strategy

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- This strategy alone across multiple altcoins can create a VERY high profit factor

with stop loss below previous pivot (example r3, s3 for s4, s4 breakouts and

breakdowns)

- I do suggest that you dig deeper into this concept as there are lots of other

strategies or functions you can add to this but the basic strategy outperformed

at least 90% of traders.

I am not going to spend too much time on pivot points as I could write a whole

entire book on them alone. Make sure to spend time on them by understanding how

they are being calculated and also how they react with market structure.

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Vwap/Mvwap Opening Range + Pivots

https://www.tradingview.com/v/phR3SJ5L/

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This is the opening range of a session but you are using the vwap to calculate the

range.

This also gives you R3-S3 pivots as well which can be used to calculate reversals and

break out.

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S1, R1 reversals to pivot point, R3, R3 breakout. This will depend on market

structure and volatility but the range which is the grey box can be very important

without these pivots.

You can find trends through the previous day's ranges. You can also use price action

and market structure to filter out many of the false breakouts.

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This indicator is very useful and another stradgie you can test out yourself and take

advantage of.

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Vwap Intraday, Daily, Weekly and Monthly

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You need experience with price action and market structure to use lower time

frames

Essentially you can use the Vwap as a Support and Resistance looking to take trades

when market structure is showing a breakout or breakdown and when vwap is

crossed by bullish or bearish price action you enter the trade.

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Retail Bait (Scams): RSI, Breakouts, EMA, MACD, Stochastic

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Indicators Lag, Price Action Leads Stochastics, MACD, RSI, moving averages

and a load of other indicators are presenting you with lagging information. They may

look pretty cool on your chart, but in reality do not consistently predict where price

will go in the future.

To see what I mean by this we have to take a look at the history of these indicators.

Look at the decades these common indicators were invented and see if you can

figure out why they were useful in their time…

• Stochastics: 1950′s

• MACD: 1960′s

• RSI: 1970′s

Do you see the connection? All of these lagging indicators were in use before

modern computer systems took over the trading world! While there were certainly

computers around during this 30 year period, they were limited to the traders that

worked on the trading floors of billion-dollar companies. The computers were

expensive, and therefore out of reach for the common trader. If you, the little guy,

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wanted to see a financial chart in the 1950′s, other than the generic charts printed in

the newspapers, you had to plot and draw them yourself! This took a tremendous

amount of time and effort. In a situation such as this being able to use a few simple

math formulas to see the data in a different way was a blessing. It was a great way

to analyze data in its time, but now we have a better way.

We have computer software that generates candlestick charts on demand! The

problem is that even though new tools like computers were invented, people never

moved away from the old way of doing things. To make matters worse a new

generation of traders came around, and knowing nothing of the olden days when

lagging indicators had a purpose, they started using them the only way they knew

how.

They took their new computer generated charts, slapped the old indicators on them,

and started using them as a way to predict the future. They never realized that they

could just look at their charts and see (much more clearly) the same information the

indicators were telling them. Now that you can see how they are flawed, and why

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retail uses them, put your market maker hat on to find how you can front run the

traders and print a chart to spoof these values.

How can you Do this? You may ask, simple reduce the lag factor, use a shorter look

back, and only use them to see where retail buyer (dumb money) is going to buy

and not for making you trading decision.

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Trading Sessions in crypto… Daily/Weekly Opens Asia London US

https://www.tradingview.com/v/Jv0RtKiB/

Another price level that is important that you can find on every single chart that is

traded by the vast majority of money in the market is the highest and lowest points

of an asset each day. The past days/weeks high and low will act as resistance and

support and can give you a bias on what higher probability you are going to see the

price traded the following day.

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I suggest taking into consideration at least the past 3 days and having these zones

marked on your chart as these are prices that will have a high probability of acting

as a key resistance and support.

This can be a leading indication on how to approach trades based on past price. You

can see trends in the market due to this as if we have consecutive higher daily highs

and higher daily lows we can see that we are in a bullish trend. If we have

consecutive lower daily highs and lower daily lows we are seen as bearish. If we

have the daily high and low in a pattern where it is ranging or consolidating more

than normally seen, you can expect a breakout or breakdown in the future.

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Fibonacci

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Arthur A. Merrill’s M and W Patterns

In 1982 Arthur Merrill picked up Levy's idea. Using data of the Dow Jones Industrials

and a constant filter of 5% to identify the five-point patterns, he evaluated the average

extent of the swing just following the completion of the various five-point patterns. He

found considerable forecasting power. Mr. Merrill structured Mr. Levy's 32 five-point

patterns into 16 patterns in the shape of an "M" which start with an upswing and 16

patterns in the shape of a "W" which start with a downswing. He then ordered them

on a scale, from the strongest to the weakest, and gave their relative occurrences and

extent of the swing following the completion of each fivepoint pattern.

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Harmonic Patterns: Derivation of Arthur Merril

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ABCD

The AB=CD pattern is considered the simplest harmonic pattern because it has

significantly less requirements than most of the other harmonic setups. In addition to

that, the AB=CD formation is much easier to detect on the price chart. After weeks of

research, back testing and live trading, experts feel comfortable to recommend this

setup to traders.

There are two types of AB=CD harmonic patterns

There are two types of AB=CD trading patterns – the bullish AB=CD and the bearish

AB=CD.

Bullish AB=CD

This pattern begins with a decrease in price (AB), followed by a reversal and a rise

(BC). The BC move then reverses into a new bearish move (CD), which goes below

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the bottom made at point B. It is expected that there will be a reversal and an increase

in price after the price completes the CD move.

Bullish AB=CD pattern

Bearish AB=CD

This chart pattern is the same as the bullish AB=CD pattern, but it is upside down.

The pattern starts with a bullish AB line, which can be reversed by a new bearish

move. The BC move then gets reversed by a new bullish move, which goes above the

top point. After noticing these qualities, traders can expect the price to reverse again,

creating a new bearish run.

Bearish AB=CD pattern

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This pattern needs to conform to particular Fibonacci ratios. Usually, there are two

Fibonacci rules associated with the ABCD figure:

BC is the 61.8 percent Fibonacci retracement of AB

CD is the 127.2 percent Fibonacci extension of BC

When trading the ABCD pattern, always conform to the Fibonacci levels. There are

various indicators to assist you in confirming the patter requirements.

Usually, the price action behavior of the ABCD pattern begins with the price going in

a new direction A, which later creates a swing level B, then retraces a portion at C,

and finally resumes to take out the important swing at the second position. It

continues until it gets to a distance equivalent to AB or D. When the CD portion gets

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to an equivalent distance to AB, it is expected that there will be a reversal of the CD

price move. At the same time, BC and CD will respond to particular Fibonacci levels.

When there’s a confirmation of AB=CD pattern, traders look to set entry points on the

chart at the beginning of the emerging reversal after the CD move. The idea is to

enter the market early enough with a trading position just after the reversal of the CD

move.

Trading the ABCD pattern involves rules meant to guide people on how to enter trade,

lock potential profits and exit with minimum loss if the market follows the opposite

direction. The entry of a trade, whether buy or sell, triggers when the pattern is in

place.

After the AB=CD harmonic pattern has been identified, you can start looking for a

trading opportunity at point D. The buy and sell signals are generated after the final

C to D leg, when a reversal is expected to occur. If the pattern is trending higher,

traders can look to sell or enter a short position at point D. If the pattern is trending

lower, it is advisable to buy the security at point D in anticipation of a turnaround.

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It is best to place stop-loss points just above or below point D, depending on the

direction of the trade. If the move goes beyond that point, the chart pattern is

invalidated and the reversal is less likely to happen. Take-profit points are placed by

using the Fibonacci levels. For instance, traders might look for a move back to the

original point A and move a trailing stop-loss to 28.2, 50, and 61.8 percent Fibonacci

levels along the way.

Just as it is with other technical analysis, the AB=CD chart pattern best works when

used along with other chart patterns or technical indicators. Also make use of volume

as a confirmation of a reversal once the AB=CD pattern makes a prediction.

Study the chart looking at the highs and lows of the price. Observe the price as it

forms AB and BC. For a bullish ABCD pattern, C has to be lower than A and should be

the intermediate high after the low at B. Point D has to be a new low below B.

When the market gets to a point where D may be found, don’t rush into a trade. Make

use of some techniques to ensure that the price reverses up, or down for a bearish

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ABCD. The best scenario is a reversal candlestick pattern. You can set a buy order at

or over the high of the candle at point D.

Gartley

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A harmonic pattern operates on the basis that Fibonacci sequences can be applied in

building geometric structures, like retracements and breakouts in prices. The Fibonacci

ratio is common in nature. It has become a famous area of focus among technical

analysts that use tools.

This is one of the most traded patterns. It is a retracement and continuation pattern

that is formed when a trend temporarily changes direction before continuing in its

original direction. It provides a low-risk opportunity for traders to go into the market

where the pattern finishes and the trend comes back.

Gartley chart pattern forms in a given context

The Gartley pattern depends on various labeled points within a general movement in

price. Most Gartley patterns are for overall bullish trends (as the point from X to A is

moving upwards) that is currently experiencing a bearish retracement.

Since the pattern is a member of the Harmonic family, every swing has to conform to

particular Fibonacci levels. We will now look at each component of the Gartley

structure.

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The Gartley structure: several important parts

X to A

The movement begins with X to A and there are no specifics for identifying the X to A

leg of the Gartley pattern. In its bullish version, this first leg gets formed when the

price sharply rises from point X to point A. This is the longest leg of the pattern.

A to B

This is where Fibonacci becomes relevant to the pattern. The distance between A and

B should be close to the size of the movement from X to A. The A-B leg will not retrace

pass point X – if it does, the pattern is considered invalid.

B to C

This movement should be a retracement of 38.2% or 88.6% of the movement of A to

B. If the B to C move retraces above point A, the Gartley pattern is void

C to D

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This should be an extension of the B to C leg. The difference when trading this pattern

is that you will place your trade entry at the point where the C to D leg has achieved

a high percentage retracement of the X to A leg.

A to D

After the completion of C-D, traders should measure the overall movement of A to D.

It should be a 78.6 percent retracement of the change in price of X to A.

Bullish and bearish variations

The bearish version of the Gartley pattern is just the opposite of the bullish pattern.

It shows a bearish downtrend with several price targets when the pattern reaches

completion by the fourth point.

Bullish Gartley patterns

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Bearish Gartley patterns

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A lot of technical analysts make use of the Gartley harmonic pattern together with

other chart patterns or technical indicators. For instance, the pattern can give a big

picture overview of where the price is likely to go over the long-term. In the meantime,

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traders focus on executing short-term trades in the direction of the predicted trend.

The breakout and breakdown price targets may also be used as support and resistance

levels by traders.

The best part about these types of chart patterns is that they give particular knowledge

about both the timing and magnitude of price movements rather than just look at one

or the other.

Just as it is with other chart patterns, there is a bullish and a bearish version. The

Gartley harmonic pattern includes the AB=CD pattern, which means that it is

necessary for traders to study it before making any decision.

To enter a Gartley trade you should first take note of the pattern and then confirm if

it is valid or not. Outline the four price swings on the chart and check to make sure

they respond to their respective Fibonacci levels to draw the Gartley pattern on your

chart. Ensure you mark every price action swing with the important letters X, A, B, C,

and D. By doing this, you will be able to estimate the overall size of the pattern and

get a clear idea about the parameters.

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If your chat is a bullish Gartley, open a long trade after noticing these conditions:

CD gets support at 127.2 percent or 161.8 percent Fibonacci level of the BC move.

The price action bounces in a bullish direction from the respective Fibonacci level.

If the Gartley pattern is bearish, then you make use of the same two rules to open a

trade. But in this case, your trade will go to the short side.

It is always recommended that you use a stop loss order regardless of your preferred

entry signal. By doing this, you will be protecting yourself from any rapid or

unexpected price moves. The stop loss order of a bullish Gartley trade should be found

below the D point of the chart pattern. But for a bearish Gartley trade, your stop loss

order should be found above the pattern’s D point.

When you open your Gartley trade and you place your stop loss order, you expect the

price to move in your favor, right? And if and when it does, you should know how long

you expect to stay in the trade.

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Crab & Deep Crab patterns

This pattern is a reversal pattern. Therefore, we have the bearish crab pattern that

indicates a bearish reversal in price and a bullish crab pattern that indicates a bullish

reversal in price. Just as it is with other patterns, there’s a naming convention for

every leg in the formation.

Beginning with the swing low or high, every leg is marked by a letter. There are five

swing points named as X, A, B, C and D. In some patterns, you will only find four (X,

A, B and C).

The crab pattern is different because of its sharp movement in the CD leg. This is

usually a 1.618 percent Fibonacci retracement of the XA leg, the previous part of the

crab pattern.

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Some rules that have to be followed to confirm a crab pattern, such as:

Following the XA leg in price, the point B is a retracement of between 38.2 to 61.8

percent. This retracement should ideally be lower than 61.8 percent

The AB leg, is a counter trend move to the initial leg

After point B, the next leg, BC, can run up to 38.2 to 88.6 percent Fibonacci ratios of

the AB leg (C should never go beyond point A)

Following the BC leg, price reverses once again, with the CD leg being the longest and

reversing between 161.8 percent of the XA leg and an extreme 224.0 to 361.8 percent

extension of the BC leg.

After the crab pattern confirms these factors, a position can be taken after the CD leg

is made. Even though you will not notice the CD leg is always reversing close to 161.8

percent, if price action starts to stall and such a reversal begins to happen, it can be

a high probability trade setup.

It is always better to wait until point D is made and then take an appropriate short or

long position. Stop-losses are placed at the low or the high of D, and targets are

typically points A or B in the pattern.

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Bullish crab patterns

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Bearish crab patterns

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The Deep Crab harmonic pattern

The deep crab is a variation of the normal crab pattern. It is still a 5-point extension,

and it still has the endpoint, D, at the 161.8 percent extension of XA, but the little

difference is in the AB=CD importance.

The most distinguishing component of this pattern is the importance of the particular

88.6 percent retracement point of B. Together with the crab pattern; the deep crab

pattern presents an especially extended and long move towards D.

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Major differences between the Crab and Deep Crab patterns

Projection of the BC leg is not as extreme as the crab

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B has to be at least an 88.6 percent retracement. Common to move more than 88.6

percent retracement level not above/below X

AB=CD pattern variations are more vital in the deep crab pattern

The BC leg is a minimum of 224 percent but can extend to 361.8 percent

How to identify the Crab & Deep Crab patterns?

It can be hard to be familiar with the Fibonacci retracement and extension values in a

crab pattern. Also, it can become tiring when using the Fibonacci tool to measure each

leg while drawing the crab pattern.

Aside from the main rules of the crab pattern, traders can look for the following signs

in the market, by analyzing the lows and highs and simply observing the price

movement.

BC leg mostly exists within the XA leg

C is a higher low as opposed to A in a bearish crab pattern or C is the lower high as

opposed to A in a bullish crab pattern

B makes a lower high when compared to X in a bearish crab pattern, or B makes a

higher low when compared to X in a bullish crab pattern

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D is the extreme, indicating a lower low or a higher high, going beyond X

What does the Crab (and Deep Crab) harmonic pattern tell traders?

Just like the butterfly, it can help traders identify when a current price move is likely

getting to its end. This means traders can enter the market just as the price changes

direction in the opposite way.

The crab and deep crab represent important overbought and oversold conditions, and

reaction after completion is mostly sharp and fast. It is the opinion of many analysts

and traders that the crab pattern and deep crab represent some of the quickest and

most profitable patterns out of all harmonic patterns.

Trading a bearish Crab pattern

To trade a bearish crab pattern, put a short (sell) order at point D (the 161.8 percent

Fibonacci extension of the XA leg).

Entry: Identify where the pattern will end at point D, and place your order

Stop-Loss: Put your stop-loss just below point D

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Take Profit: The location of your profit target is highly subjective and depends on your

objectives and market conditions. If you desire aggressive profit, place it at point A of

the pattern. For a more conservative profit, place it at point B.

Trading a bullish Crab pattern

First of all, choose the crab pattern charting tool and follow all the above rules to

identify the pattern. Remember that the Fibonacci ratios are very important to trade

the crab pattern. If you notice the pattern on a price chart and if you find the ratios

not matching with the pattern rules, it means that the pattern is not valid. So do not

trade that pattern.

When the price action confirms the pattern, immediately enter for a buy. If you are a

conservative trader, ensure you wait for a couple of bullish confirmation candles before

entering the trade.

There are four targets (X, B, C, A) to place the take-profit order in the crab pattern.

At the start, traders try to book full profit at point A, but when the price crosses point

B, the market turns sideways. So book half of your profit at point B and then close

your full positions at point A.

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Most of the traders place their stop-loss way below point D; however, that’s a wrong

way to do it because they are risking more due to this simple logic. If the price action

breaks point D, it automatically invalidates the pattern.

Bat pattern

The pattern is a 5-point retracement structure that was discovered in 2001 by Scott

Carney. It has particular Fibonacci measurements for every point within its structure.

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It is necessary to note that D is not a point, but rather a zone in which price is probably

going to reverse. This zone is known as the Potential Reversal Zone (PRZ).

The B point retracement of the primary XA leg has to be lower than a 0.618, preferably

a 0.50 or 0.382. The PRZ is made up of 3 converging harmonic levels:

0.886 retracement of the primary XA leg

Extended AB=CD chart pattern, mostly 1.27 AB=CD

Minimum BC projection is 1.618

The first target might be the 382 retracements of AD and the second target the 618

retracements of AD. A popular stop-loss level would be behind the X-point.

Conservative traders may wait to get additional confirmation before trading. Bat

patterns can be bearish and bullish.

The bat harmonic pattern follows different Fibonacci ratios. One of the major ways to

differentiate it from a Cypher pattern is the B point which, if it doesn’t go above the

50 percent Fibonacci retracement of the XA leg then it is a bat, otherwise it can turn

into a cypher structure.

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The market strategy of the pattern is suitable for all time frames and all market types.

Traders have to keep in mind that on lower time frames using the bat pattern market

strategy has some challenges because the pattern tends to appear less frequent on

lower time frames.

4 legs pattern

As mentioned earlier, the bat harmonic pattern looks very similar to the Gartley

pattern. It has four different legs marked as X-A, A-B, B-C, and C-D.

X-A: In its bullish version, the first leg appears when the price sharply increases from

point X to point A. This is the longest leg of the pattern.

A-B: The A-B leg then sees the price switching direction and retracing 38.2 to 50

percent of the distance covered by the X-A leg. Have it in mind that the A-B leg can

never retrace beyond point X. But if it does, the pattern is considered invalid.

B-C: Here, the price changes direction for a second time and moves back up, retracing

anything from 38.2 to 88.6 percent of the distance covered by the A-B leg. If it retraces

up above the high of point A, the pattern is considered invalid.

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C-D: This is the last and most significant aspect of the pattern. As with the Gartley

pattern, this is where the bat harmonic pattern ends and traders place their long (buy)

trade at point D.

However, with the bat pattern, traders look to place their entry trade order at the

location where the C-D leg has reached an 88.6 percent retracement of the X-A leg.

Ideally, point D should also represent a 161.8 to 261.8 percent extension of the B-C

leg.

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Bullish bat patterns

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Bearish bat patterns

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It offers traders the opportunity to enter the market at a good price, just as the pattern

completes and the trend resumes. The main difference of the bat pattern to the

Gartley pattern is where it completes – at an 88.6 percent Fibonacci retracement of

the X-A leg. Its inner retracements are also slightly different.

The harmonic bat pattern teaches traders how to trade the bat pattern and begin

earning money with a new exciting approach to technical analysis. The market strategy

of the pattern is part of the harmonic trading patterns system of trading. Just as it is

with many harmonic patterns, there is a bullish and a bearish version of the bat

pattern.

How to trade when you see the Bat pattern?

Before trying and trading the pattern, confirm from this checklist that the pattern is

real. It should include these vital elements:

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An AB=CD pattern or an extension of this pattern

An 88.6 percent Fibonacci retracement of the X-A leg

A 161.8 to 261.8 percent Fibonacci extension of the B-C leg

Next will be to look at how traders can trade using the bat pattern. We will make use

of the bullish bat pattern as an example. For a bearish bat pattern, simply do the

opposite for your orders.

The first thing to look for when looking for this pattern is the impulsive leg or the XA

leg. We are trying to identify a strong move up or down depending if we either have

a bullish bat or a bearish bat pattern.

The next thing that needs to be satisfied for an authentic bat pattern structure is a

minimum 0.382 Fibonacci retracement of the XA leg and it can go as deep as 0.50

Fibonacci retracement of the XA leg, but it cannot break below the 0.618. This will

form the B leg of the pattern.

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The next thing traders should do is to look for a retracement of the AB leg up to at

least 38.2 percent Fibonacci ratios, but it cannot exceed the 88.6 percent, and this will

form the third point C of the pattern strategy.

The last thing to do is to establish the D point, and to get to the D point, find the

0.886 Fibonacci ratios of the impulsive XA leg, which will lead to a deep CD leg, and

finally, it will complete the entire structure of the pattern.

Market strategy

The market strategy of the pattern has been tested across various classes of assets

(commodities, currencies, stocks, and cryptocurrencies). It is recommended that

traders should take the time and back-test the bat harmonic patterns strategy before

using this advanced pattern for trading.

Step 1: Drawing the pattern

Begin by clicking on the bat pattern indicator that is found on the right-hand side

toolbar

Identify the beginning point X, which can be any swing high or low point on the chart

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After identifying the first swing high/low point, simply follow the market swing wave

movements

You should get 4 points or 4 swings high/low points that join and form the harmonic

bat pattern strategy

Step 2: Trading the pattern

The 88.6 percent Fibonacci ratio provides traders a more reliable risk/reward ratio

which is why the market strategy of the bat pattern is such a very popular as a market

strategy. The best entry point is the 88.6 percent Fibonacci retracement which is a

very accurate market turning point.

It is recommended that traders should enter as soon as they touch the 88.6 percent

figure. Oftentimes the harmonic bat pattern strategy doesn’t go much above this level.

Step 3: Placing a stop-loss

Usually, traders should place their protective stop-loss lower than the point X of a

harmonic bat pattern. That is the only logical location to hide the stop-loss because

any break below will automatically invalidate the pattern.

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Step 4: Take-profit margin

There can be several ways to manage your trades, but the best target for this pattern

should be to use a multiple take profit formula. For this pattern strategy, take the first

partial profit once you hit wave-C level and the remaining half once we break above

wave-A.

By doing this you will accomplish two things:

first, you’ll ensure that you accumulate profits,

and secondly if the markets reverse, you ensure you’re stopped at BE and don’t lose

any money.

Butterfly pattern

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The butterfly pattern is a reversal chart pattern that is in the category of harmonic

patterns. It shows price consolidation and is mostly noticed at the end of an extended

price move.

Traders can apply the butterfly pattern to determine the end of a trending move and

position for the start of a correction or new trend phase. You will often see this pattern

during the last wave of the impulse sequence in Elliott wave terms.

The harmonic butterfly pattern, like all other harmonic patterns, is a reversal trading

pattern that can be universally traded all the time. Some people prefer to trade them

on higher time frames.

Some many different structures and variations can be seen as butterfly structures.

The butterfly looks similar to the Gartley 222 harmonic pattern, but the main

advantage is that traders can buy and sell at new lows or highs because wave D

terminates beyond the starting point of wave XA.

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The pattern was discovered by Bryce Gilmore and Larry Pesavento, and it usually

forms close to the extreme lows and highs of the market and predicts a reversal.

The butterfly pattern is made up of four legs marked X-A, A-B, B-C, and C-D. It helps

traders determine when a current price move is probably getting to its end. This means

traders can enter the market as the price changes direction.

Just as mentioned earlier, the butterfly pattern resembles the bat and Gartley patterns,

with four different legs labeled X-A, A-B, B-C, and C-D. The pattern tells traders when

to sell after the pattern has completed.

X-A

In its bearish version, the first leg is formed when the price sharply falls from point X

to A.

A-B

The A-B leg then notices the price switch direction and retraces 78.6 percent of the

distance covered by the X-A axi..

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B-C

In the B-C leg, the price changes direction for a second time and goes back down,

retracing 38.2 to 88.6 percent of the distance covered by the A-B leg.

C-D

The C-D axis is the last and most significant part of this pattern. Just as it is with the

Bat and Gartley patterns, you should also have an AB=CD structure to complete the

butterfly pattern, but the C-D leg mostly extends to form a 127 or 161.8 percent

extension of the A-B leg. Traders would be looking to enter at point D of the pattern.

A big variation with the butterfly pattern over the Bat or Gartley patterns is that traders

look to place their trade entry order at the point where the C-D leg has reached a 127

percent Fibonacci extension of the X-A leg. It is the longest leg of the pattern.

Generally, point D should also show a 161.8 to 261.8 percent extension of the B-C leg.

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The pattern has four price swings, and its presence on the chart looks like the letter

‘M’ in downtrends, and ‘W’ in uptrends. During its formation, it can at times be

mistaken for a double bottom or double top pattern.

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Bullish Butterfly patterns

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Bearish Butterfly patterns

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The Butterfly is one of the most important harmonic patterns due to its nature of

where it shows up. Both Carney and Pesavento emphasized that this pattern shows

the important highs and lows of a trend. In fact, by using various time frame analyses,

it is common to see various butterfly patterns show up in different timeframes all at

the end of a trend. The pattern is an example of an extension pattern and it generally

forms when a Gartley pattern is invalidated by the CD wave going pass X. There are

two versions of this pattern that are bullish, in which traders are advised to buy, and

bearish in which traders should sell. Precision is vital when it comes to applying the

butterfly pattern because it allows traders to get rid of errors.

Before trading the butterfly harmonic pattern, confirm from the following checklist that

the pattern is real. It should have the following vital elements:

AB= an ideal target of 78.6 percent of XA leg

BC= minimum 38.2 percent and maximum 88.6 percent Fibonacci retracement of AB

leg

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CD= Is a target between 1.618 to 2.618 percent Fibonacci extension of AB leg between

1.272 to 1.618 of XA leg

Entry point

Determine the place where the pattern will complete at point D – this will be at the

127 percent extension of the X-A leg.

Stop-loss

Put a stop-loss just below the 161.8 percent Fibonacci extension of the X-A leg.

Take profit target

The location for placing a take-profit target with this pattern is very subjective and

depends on your trading goals as well as the conditions of the market. To have an

aggressive profit target, put it at point A of the pattern. For a more conservative profit

target, put it at point B.

Trading a bearish butterfly harmonic pattern

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Place the sell order at point D (a 127 percent extension of the XA leg). Position the

stop-loss right above an extension of 161.8 percent of the XA leg. And place the profit

target at A for an aggressive move at B for a defensive move.

Determine the end of the pattern at point D, which is an extension of 127 percent of

the XA leg. You need to put a buy order at this point. Now, below a Fibonacci extension

of 161.8 percent of the XA leg, a stop-loss can be placed. Placing a profit target

depends on both market conditions and your trading goals.

Shark pattern

The structure of a shark pattern has an impulse leg (X-A) and a retracement leg (B).

In this case, the retracement has no particular value. The continuation leg (C) has to

get to a Fibonacci extension of 113 percent of the B-A leg, but shouldn’t go beyond

the 161.8 percent mark, a retracement for X-C follows afterward.

The shark pattern so obtained has to get to an extension of 88.6 percent of this

retracement, but should not be more than 113 percent. The next Fibonacci extension

will be B-C, which is an extension of the A-X leg, within the 161.8 to 224 percent

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range. But as far as entering a trade goes, it is different from other harmonic patterns,

for example:

The entry point should be at an extension of 88.6 percent of the O-X leg, and the

stops will follow up at point C

Targets can be at 61.8 percent of the B-C leg

It is not difficult finding the zone to enter trades. This is the area where the X-C

Fibonacci retracement and the B-C Fibonacci extension overlap

The main factor that differentiates between the harmonic shark and other patterns is

that it depends on the 88.6 percent and the 113 percent reciprocal ratios. Once the

price point at D is created, prices decline or rally very quickly. Therefore it needs active

management of the trade. In other words, you simply cannot set up the harmonic

shark pattern and come back a while later to trade it. By that time price would have

gone a major distance.

Just like any other harmonic pattern, the shark trading strategy is a five-leg reversal

pattern. It follows particular Fibonacci ratios. The pattern differentiates itself from the

other harmonic patterns by its five points set up being labeled as O, X, A, B, C.

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Additionally, the termination point of leg B ends above wave X. It goes beyond a

minimum of 1.13 and a maximum of 1.618 Fibonacci ratios.

A real shark pattern should fulfill these three Fibonacci rules:

AB= retraces between 1.13 to 1.618 Fibonacci extension of XA leg

BC= extends to 113 percent Fibonacci extension of 0X leg

CD= Poses a target of 50 percent Fibonacci Retracement of BC leg

The shark harmonic pattern is within the 5-O pattern structure. The structure means

that, unlike the other harmonic patterns, all trades have to be taken based on point

C. While point D is used as a pre-defined profit target. Generally, the completion point

of the CD swing-leg ends at 50 percent Fibonacci retracement of the BC leg. It has to

also satisfy the AB=CD condition.

This is the most common way the pattern is traded by attempting to grab the final

move of a complex pattern entering at C. It also has a protective stop loss above or

below the 2.24 of AB retracement and targeting the 50 percent retracement of the BC

swing-leg.

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How to trade when you see the Shark pattern?

The ideal method used to trade a shark pattern is quite different from that used for

other chart patterns. The take profit can be at 50 to 61.8 percent of BC.

The way to trade this pattern is to go in at the open of the next candlestick after the

harmonic indicator has detected the pattern. As soon as the C-leg forms, enter the

market with a protective stop-loss at the 2.618 extensions of AB swing-leg.

Determine on the chart the starting point 0, which can be any swing high or low point

on the chart

After locating the first swing high/low point, follow the market swing wave movements

Traders need to have 4 points or 4 swing high/low points that join together to form

the harmonic crab pattern strategy. Each swing leg has to be validated and stick to

the Fibonacci ratios of the shark pattern forex.

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Trading the pattern

Buy at point D, which has to satisfy the requirement CD = 1.13 OX segment. The D

to X can be found anywhere between 0.886 to 1.13, but it is best to take trades using

an ideal 1.13 extension.

Stop-loss

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The stop-loss can be placed below the 1.150 Fibonacci extensions of XA at point C. As

the market begins to go towards the first take profit, move it after D leg. This is the

best place to hide the stop-loss because any break below will automatically invalidate

the Fibonacci requirements for a shark pattern.

Cypher pattern

The cypher pattern is an advanced harmonic pattern that, when traded correctly, can

have a truly outstanding strike-rate as well as a pretty good average reward-to-risk

ratio.

The cypher is a five-point pattern, composed of points XABCD. It is easy to spot on a

chart due to its characteristic wave-like look, displaying either rising peaks or falling

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valleys. Traders can trade it like other harmonic patterns, by waiting for a reversal at

the end and then using pending orders to profit from any potential breakout.

This pattern looks like the butterfly in both its construction and where it will occur

(close to the end of trends). However, the cypher pattern is rare and not one that

shows up frequently. But don’t confuse rarity with being more powerful or profitable.

It is known to have a high positive expectancy, no different than a bat or alternative

bat. Just like all other harmonic patterns, the Cypher has specific rules and conditions

that must be met for it to be a particular cypher pattern.

The pattern must verify a few conditions to confirm:

B has to retrace to an expansive range between 38.2 and 61.8 percent of XA, at least

38.2 percent, but not exceeding 61.8 percent.

C is an extension leg and goes beyond A – but must move to at least 127.2 percent,

but it is normal for it to go as far as 113 to 141.4 percent. It is considered invalid if it

moves beyond the 141.4 percent.

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The CD leg should break the 78.6 percent level of XC.

The PRZ (potential reversal zone) of D is a wide range where the price has to get to.

Price can move anywhere between 38.2 to 61.8 percent.

Cypher has less rules to follow compared to other harmonic patterns. Although its

successful rate has nothing special compared to Gartley or Bat, the frequency of

showing up and the ease of rules make this pattern become the favorite for all

beginner traders. This pattern works best when the market is calm. In a strong

trending market, especially after the news, the cypher pattern becomes less reliable.

The bigger the pattern (the longer it takes to form the pattern), the stronger the

support/resistance it gives.

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The ‘B’ Rule

Even though not many people apply it, it is an important rule. The rule basically states

that B cannot touch the 78.6 percent retracement of X to C, including the candlestick

wicks.

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Bullish and Bearish Cypher Patterns

In any cypher, points X, C and D are the most important points. For a bullish cypher

pattern, X should be the pattern low and C the pattern high. A bearish cypher pattern

makes its high at X and its low at C.

In the bullish cypher pattern, the points A and C has to make successively higher highs

and point D has to be above X. In the bearish cypher points A and C have make

successively lower lows and point D should be below X.

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Market Psychology

The cypher is a technical wave pattern in which the market is trending but it makes

sharp reversals during the day. The important point of the bullish cypher is that both

the lows and the highs are trending upwards. For the bearish pattern, the opposite

happens.

If the cypher completes successfully with a reversal taking place at point D, it may

eventually become a trend channel where the price moves between the highs and

lows. Cyphers can also appear inside price channels that are already formed.

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While trading the cypher pattern, you will apply a set of simple rules. They will try to

minimize risk and maximize profits. Even though there is one more important step to

learn before defining the cypher pattern trading strategy rules.

Step 1: Drawing Cypher patterns

Click on the harmonic pattern indicator located on the right-hand side toolbar of the

TradingView platform.

Identify the starting point, X, on the chart, which can be any swing low or high point.

Once you’ve located your first swing high/low point, follow the market swing wave

movements.

Every swing leg has to be validated and abide by the cypher pattern forex Fibonacci

ratios.

Step 2: Trading process

Now that you know how to identify and qualify the harmonic cypher pattern, it’s time

to trade the pattern. Standard methods of trading the cypher pattern include:

Entry point

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The cypher pattern may be the most exciting harmonic pattern for risk management,

because it has the highest winning rate. Backtesting results have continuously proven

the cypher pattern forex is a very dependable harmonic pattern.

Next, buy with a market order at the first candle preceding the completion of the D

point at 0.786 Fibonacci retracement of the XC leg. Once the market touches the 0.786

level, wave D is in place, because you can’t control how far the market will go.

When the CD leg gets to the 78.6 percent retracement level, the cypher pattern is

complete and valid. However, the 78.6 percent Fibonacci retracement level of X to C

also acts as the standard entry point for a valid cypher pattern trade.

Take profit

There are some ways to take profit with this pattern, but the standard method is to

scale out of your position at the first take profit level and end the trade at the second

take profit level. Take profit once you get to point A. To get to such levels, draw a

Fibonacci retracement of the CD leg.

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The cypher patterns trading method is a reversal method. Make sure you capture as

much as possible from the new trend. If you’re not a fan of reversal strategy, and you

prefer a trend following strategy, follow the MACD trend following strategy-simple to

learn another strategy. The strategy has attracted a lot of interest from the Forex

trading community.

Ensure you take profits once you reach point A of the pattern, because it has

conservative take profit target. For the most part of the harmonic patterns, it’s best

to lock in profits as soon as possible. Since the cypher pattern is one of the most

profitable harmonic patterns, you can give it more room for the price action to breathe.

You have the chance to at least see a retest of the wave A.

Stop-loss

Ensure you give your trade at least 10 pips space above X in the intraday charts. While

trading a bullish cypher pattern, place the stop-loss at least 10 pips lower than the

low of X. For a bearish pattern, place the stop-loss at least 10 pips higher than the

high of X. That’s the only logical place to hide your stop-loss, because any break below

will automatically invalidate the trade.

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Three Drives pattern

The three drives pattern is self-sufficient, having different entry and exit points. It is

a reversal pattern that is made up of three swings of the same length in the same

direction. They correspond to particular Fibonacci ratios to identify potential reversal

zones. The pattern can be both bearish and bullish and once discovered, it can be a

precursor to strong market turns.

The three drives pattern is a reversal pattern that is made up of various higher highs

or lower lows. They complete at a 127 or 161.8 percent Fibonacci extension. It can

indicate that the market is exhausted in its recent move and a reversal will probably

occur on the price chart. The bullish version of the pattern can help to determine

possible buy opportunities and the bearish version can help to determine possible

opportunities to sell.

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The three drives pattern was first stated by Robert Prechter. It is not often used in

trading because it is difficult to discover and less common than other forms of

harmonic patterns. It is made up of symmetrical price movements with similar

Fibonacci projections in a 5-wave structure.

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Bearish Three Drives pattern

This pattern begins with the first drive which is a bullish move. Then a lower

retracement to give the A point, which should complete into the 6.18 to 78.6 percent

retracement of the first drive. From here another move higher will draw, providing the

second leg which completes into the 1.27 percent extension of the first drive.

From here, a second retracement lower which should complete into 61.8 to 78.6

percent retracement of the second drive will appear, to give the B point. Lastly, we

want to see one final push higher, giving us our third wave, which should complete

into the 1.27 percent extension of the second drive, providing the third drive and the

level which traders can look to sell.

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Bullish Three Drives pattern

The pattern begins with a bearish swing to give traders their first drive. Traders can

then notice a retracement higher into the 61.8 percent level of the first drive to give

traders the A point. From here, the price turns lower again to give the second drive

which should complete into the 1.27 percent extension of the first drive.

From here, the price corrects higher once more. It goes back up into the 61.8 percent

retracement of the second drive to give us our B point. Then there will be one final

push lower with price trading down to the 1.27 percent extension of the second drive

to give a third drive that completes the pattern and offers a buying zone.

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The three drives harmonic pattern is identified by various three higher highs or lower

lows. They gather in a reversal of the existing trend. Every move lower or higher is

quantified by using the Fibonacci extension and retracement levels of 61.8 and 127.2

percent.

The below rules can help traders identify the pattern:

Correction A has to be a 61.8 percent retracement of drive 1.

Correction B has to be a 61.8 percent retracement of drive 2.

Drive 2 has to be a 1.272 extension of correction A.

Drive 3 has to be a 1.272 extension of correction B.

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In some instances, the definition of the 3-drive pattern may be expanded to include

various Fibonacci retracement or extension levels, like a 161.8 percent extension

rather than a 127.2 percent extension. The pattern also works without Fibonacci levels,

but it may be less accurate.

Traders also need to look at the volume behind every drive higher or lower. If the

volume during drives is higher than during corrections, traders can have more

confidence in an eventual trend change and capitulation after the last drive.

Psychologically, the three drives pattern indicates three last attempts at driving the

price lower or higher before capitulation happens and the trend reverses.

The pattern is defined by three unique, consecutive and symmetrical drives to a top

or bottom. Symmetry in both time and price is vital. It is critical to not force the pattern

on the chart. If you don’t notice it, it is best not to trade it.

A reversal will probably happen when the third drive completes. Conservative traders

observe for more confirmation that price is reversing. Traders can set their targets at

their discretion, but normally goes beyond the last retracement.

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If the pattern doesn’t show up, this could point to a strong continuation in the

previously dominant movement. The three drives pattern can either be bearish or

bullish.

The 3-drives pattern frames the trade

To trade the 3-drive pattern effectively, traders look to taking a position in the market

on the third drive. This provides the most accurate price levels of where to enter the

trade. It also gives the best potential to have a profitable trade.

The third drive mostly advances to a Fibonacci extension of 127.2 percent of the drive

C. Some traders prefer to place their take-profit levels to the 161.8 percent of drive C.

This is mainly a matter of personal preference and traders can set the levels to their

choice as long as it provides a good risk to reward ratio.

Traders can apply the pattern in various ways, such as:

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To position a pending sell or buy order at the last 127.2 percent level, while keeping

the stop-loss a few pips below or above the current swing low or high.

Wait for the market to show a rejection of the price close to the third drive. This

involves observing the candlestick patterns that show price rejection such as pin bars

or dojis. These rejection bars can be differentiated based on the lower wicks or long

upper. After the rejection bars form, traders can then put their entry and stop-loss

points at the high and the low of the bars.

Lastly, traders can also wait for the price to break through the 127.2 percent level.

They can put a pending order when the price falls lower than this high or low. Applying

the previously formed swing point low or high, the stops are then based accordingly.

It announces a potential reversal

The three drive chart pattern is a reversal pattern that comes out of the current trend.

Therefore, it makes it possible for traders to profit from the trend change. The pattern

can also indicate traders who are positioned in the trend to exist once the pattern

comes up.

To effectively trade the three drives harmonic pattern, use the Fibonacci retracement

and extensions to qualify the pattern. But this pattern does not occur very often, so

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traders need to only keep an eye out for it rather than put their entire trading on just

the three drives pattern. With time, traders can form their trading processes to view

the reversal of the price following the three drives pattern.

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5-0 pattern

The 5-0 pattern begins with either an uptrend or a downtrend which gets exhausted

and draws zigzag like corrective movements. The qualities of the 5-0 pattern to look

at include:

AB movement has to be 1.13 to 1.618 retracement of XA.

BC movement has to be 1.618 to 2.24 retracement of an AB.

CD movement ought to be 0.5 retracements of BC

C should be between 0.886 and 1.13 of 0X movement

If the conditions are satisfied, some traders trade the last leg of CD. They enter at C

with a stop below 2.24 of AB retracement and aiming at 50 percent correction of BC

movement.

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The 5-0 harmonic pattern is traded when the price is getting to point D. The stop-loss

is positioned a few ticks below/above the farthest possible D level. Unlike a lot of the

other patterns, 5-0 doesn’t have specific targets because it usually begins a new trend.

Here the pattern fib ratios don’t matter much. Entries might be done with a limit order

or on price reversals away from point D. All entries have to be confirmed for

risk/reward ratio. Entries having less risk/reward have to be taken cautiously or

discarded altogether.

A reliable indicator should automatically scan for, recognize, display, and alert

emerging 5-0 and other harmonic chart patterns. It indicates the name of the pattern,

when it happened, and the stop price. The pattern scanner goes through various

charts in the same period and assists traders to find trading opportunities as soon as

they come up.

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Bearish 5-0 pattern

To correctly identify the bearish 5-0 pattern, first, find the shark pattern, wait for the

implementation of its targets at 88.6 or 113 percent, and the following rollback in the

direction of 50 percent of the BC wave. The length of this wave in both graphic

configurations is 161.8 to 224 percent of AB. If after the convergence zones of the

shark pattern is reached, a correction in the direction of 23.6 percent, 38.2 percent,

or 50 percent has followed, we can talk about the transformation of the real pattern

into 5-0.

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Bullish 5-0 pattern

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After the target at 113 percent of the shark harmonic pattern was achieved, it was

followed by a rollback in the direction of 38.2 percent of the CD wave. The trader has

to search for this place for confirmation signals to create a long position. It can be

both indicators, prompts from price action, or other items and techniques used for

technical analysis.

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The 5-0 harmonic chart pattern suggests a long entry upon completion of the pattern

or confirmation of the D point of the pattern. The pattern is a unique 5-point reversal

structure that typically shows the first pullback of an important trend reversal. It is a

relatively new pattern that has 4 legs and particular Fibonacci measurements of each

point within the structure, creating room for better flexible interpretation. The

Potential Reversal Zone (PRZ) is described differently from other harmonic chart

patterns.

Conservative traders look for more confirmation before getting into a trade. Targets

for this pattern can be placed at the discretion of the trader as the reversal point could

be the beginning of a new trend. Common stop-loss levels are found behind a structure

level beyond the D point or the next vital level for the Fibonacci sequence.

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One of the best processes of interpreting this pattern is to look at it from a tired and

frustrated trader’s point of view. Taking the bullish 5-0 pattern as an example, then

we can see why. The AB leg ends with B below X, making a lower low. We then get a

longer move in time where the BC leg is the most prolonged move with C ending over

A.

The movement from B to C may look like a bear flag or bearish pennant. C to D

indicates intense shorting pressure and a belief among bears that new lows are on the

way. Rather, we get to D – the 50 percent retracement of BC. Rather than new lower

lows, we get a confirmation swing forming a higher low. That move will most probably

create a brand new trend reversal or significant corrective move.

The pattern starts (with 0) at the beginning of a long price move

After 0 has formed, an impulse reversal at X, A, and B should have a 113 to 161.8

percent extension

The projection off of AB has a 161.8 percent extension requirement to C. C can extend

beyond the 161.8 percent extension but not beyond 224 percent.

D is the 50 percent retracement of BC and is same as AB

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The reciprocal AB=CD is needed

To perfectly draw or locate a 5-0 harmonic chart pattern on the price chart, first of all,

we need to locate the X and A points of the pattern. The X point is seen at the bottom

of a strong bearish trend. The A point is found at the top of a bullish trend. The next

thing traders need to do is to draw a Fibonacci retracement tool from X to A to

determine the B point of the chart pattern. The B point should be within the 113

percent to 161.8 percent Fibonacci retracement of XA.

In the last step, we will get the entry point, D point, of the 5-0 harmonic chart pattern.

To get the D point of the pattern, draw a Fibonacci retracement tool from B to C. The

D point has to be at the 50 percent Fibonacci retracement of BC.

Traders can be sure when the D point of the pattern is confirmed. The stop-loss for

the order should be set at the lower support level. The profit target for the order

should be placed within the 50 to 88.6 percent Fibonacci retracement of CD.

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The C axis can also be traded, if it is the D point of a bearish harmonic chart pattern.

The B point can be traded if the entries are confirmed by the other tools for technical

analysis.

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Bollinger Band

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Bollinger Bands are a technical analysis tool developed by John Bollinger in the 1980s.

Bollinger Bands are a type of chart indicator for technical analysis and have become

widely used by traders in many markets, including stocks, futures, and currencies.

There are three lines that compose Bollinger Bands: A simple moving average (middle

band) and an upper and lower band. By default, the middle band is the simple moving

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average of the past 20 days. The upper and the lower bands are 2 standard deviations

from the middle band.

The purpose of Bollinger Bands is to provide a relative definition of high and low prices

of a market. Prices are relatively high at the upper band and low at the lower band.

There are several uses for Bollinger Bands, such as determining overbought and

oversold levels, as a trend following tool, and for monitoring for breakouts.

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Statistical Concept

Bollinger Bands are based on the statistical concept that there is over 95% possibility

that the stock price would fall between two standard deviations from the simple

moving average.

There is a 95.45% possibility that the stock price will be between the two standard

deviations, the upper and lower lines. If the stock price is higher than the upper band,

it is a 2.275% possibility. which means that the stock price might be overbought.On

the other hand, If the stock price is lower than the lower band, it is a 2.5% possibility,

which means that the stock price might be oversold.

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Bollinger Band Percent B

Percent B reflects close price as a percentage of the lower and upper Bollinger Bands.

It can easily visualize if the stock price is overbought or oversold.

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Percent B equals close price minus lower band over upper band minus lower band,

multiply by 100.

%B = (Price-Lower Band)/(Upper Band - Lower Band) ×100

If the close price is higher than the upper band, percent B would be greater than 100.

In this case, it is usually that the stock price is overbought

If the close price is equal to the 20-day moving average, percent B is 50. In this case,

the stock price is natural.

If the close price is lower than the lower band, percent B would be lower than 0. In

this case, the stock price is oversold.

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Bollinger Band Width

The Bollinger Band Width reflects the consolidation of stock price movements and

volatility. The Bollinger Band Width can see the strength of trend (both on bull and

bear trend.) The Bollinger Band Width is the difference between the upper and lower

bands over the middle band.

Band Width= (Upper Band - Lower Band)/(Middle Band)

Squeeze:

- Tighten band width

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- Forecast for increased volatility

Bulge:

- Expanded band width

- Forecast for decreased volatility

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High Probability Trade Setups

Identify supply and demand zones

Set the Fibonaccian tool to show 1 - 0.5 - 0, you can save this as a template.

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Zoom out to a month take and draw a fib at last month and this month

Repeat this for the Week, Tip: use a different color each time.

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Repeat This for the Last day.

Identify When the market maker trades.

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These are the market maker changes in between sessions, where one market maker

talks to another and talks about what they achieved in their session and what needs

to be done to achieve their target.

Find Inialital high/ low of the day this is set around 5 am to 8 am.

This was a trade setup I took. The take profit was on the last day high/low 50.

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