Harmonic Pattern Finder V3 Indicator For MT5
Table Of Contents:
The Harmonic Pattern Finder V3 Indicator For MT5 is a harmonic pattern indicator which recognises a wide plethora of various harmonics emerging and existing on the charts. Whilst certain harmonics pattern indicator are usually limited to just one specific harmonic or a few of them, this pattern finder pretty covers a mixture of the most popular and also some obscure harmonics that trade can trade.
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Understanding harmonics
Harmonics are probably the most advanced price patterns for trading any market. They are simple geometric patterns which are based off specific Fibonacci ratios to pinpoint market turning points with a very high level of accuracy. The whole idea of harmonic trading relates mainly to Fibonacci and how the Fibonacci sequence exists in many real-life patterns, including the markets. Price has shown us how it tends to respect certain Fib ratios time and time again, and this is where the Harmonic Pattern Finder V3 Indicator For MT5 comes in.
Harmonic chart patterns, as we know them today, stem from the foundation which was created by H.M Gartley, who was a finance analyst and author in the early and mid 20th century. One of the most popular harmonic patterns was named after him, which is the Gartley pattern, and a host of other harmonics eventually followed suit.
For every single pattern, there are very precise Fib ratios that result when a trader is moving from X to A, A to B, B to C and C to D, and all these ratios are supposed to be strictly adhered to for the pattern to be valid. Furthermore, each pattern has specific profit targets that traders could aim for.
Using the indicator
The Harmonic Pattern Finder V3 Indicator For MT5 recognises the AB=CD, Gartley, bat, alternate bat, butterfly, crab, deep crab, three drives, cypher, shark, 5-0, nen star, black swan and white swan harmonic patterns.
What is important about this indicator is it should only serve as a guide at identifying a harmonic. Traders should still actually draw that specific harmonic to add confluence or confirm that indeed the pattern does exist at that particular time, and draw it as accurately as possible sticking with the rules. The indicator does make the job easier, however it should also be confirmed with the human eye. For them to be able to do this, they obviously have to understand all the required Fib retracements and extensions for each particular pattern.
The first obvious drawback that is very apparent with this indicator is even though it’s good that it helps a trader to recognise a wide range of harmonics, visually, this definitely looks very messy and confusing. The solution to this, first and foremost, is for a trader to specialise in one or two harmonics patterns that are their favourite and use the indicator to help locate those only.
The customisation of this indicator would certainly help to diminish the clutter as traders can select which pattern/s they want the indicator to recognise and also whether the indicator should show past or emerging patterns, amongst other adjustable filters. It is also advisable to save a template with the modified settings of the indicator and also have the template backed up in another storage location.
The screenshots above are the daily chart displaying a few bullish Gartley patterns and then the same pattern on the H4 chart on the next screenshot, which is one of the most popular of all harmonics and one of the most effective. The filtering is one great feature of the indicator whereby it can recognise one pattern only, which looks a lot clearer and sensible. Once the pattern has been confirmed, then the next step can be to confirm the pattern with its retracements.
If all of this criteria has been fully met, then D is the trigger area to either go long in the bullish pattern or short on the bearish pattern. Depending on the time-frame, a trader could utilise the ATR value plus the spread as their stop loss distance, which would be above or below the D depending on whether it’s a bearish or bullish pattern.
What’s powerful about harmonics is that they provide a very detailed framework at precise entries, taking out any second guessing. Traders can typically trade with slightly tighter stops than usual once having identified the perfect harmonic pattern which ticks all the boxes.
They can be combined with a host of other technical analysis ideas such as breakouts, trend-following, reversals etc. and like anything else, should not be traded just on their own. Harmonics offer trading opportunities with very high reward to risk ratios over the long haul due to their precision of entry. Harmonics are better suited at higher time-frames because there would be too many on smaller time-frames.
Summary
On the whole though, harmonics, even with this indicator, do take a lot of time and experience to understand and trade because of all the complexities with the Fib ratios. This is why the Harmonic Pattern Finder V3 Indicator For MT5 should be used as a guide. The best way to get the most out of this it is by specialising in, ideally, one harmonic pattern, sticking to it and gaining a lot of screen time in drawing each of that pattern’s specific Fib ratios. The indicator can then be used to confirm the pattern accordingly.
