Classic and Harmonic Patterns

Lessons in this module

1. 5.1

   Continuation patterns: flag, pennant, wedge

   Recognize trend continuation patterns

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2. 5.2

   Reversal patterns: head and shoulders, double/triple top and bottom

   Recognize the classic trend reversal patterns

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3. 5.3

   Triangles: symmetrical, ascending, descending

   Tell the types of triangles apart and their likely outcome, and know what history showed: the break more often went through the sloped boundary (ascending triangles broke up only 23-30% of the time, descending ones 71-74%); the side of the break decides, not the pattern's name

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4. 5.4

   Cup and handle and rare patterns

   Get to know less frequent but meaningful patterns

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5. 5.5

   Harmonic patterns: built on Fibonacci

   Understand how harmonic patterns are built from Fibonacci ratios

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6. 5.6

   Gartley, Butterfly, Bat, Crab

   Learn to find and mark the main harmonic patterns

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7. 5.7

   ABCD and Three Drives

   Learn the additional harmonic models

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8. 5.8

   Practice: finding harmonics in history

   Find and mark harmonic patterns on historical charts, and know what history showed: after point D is confirmed price moves in the pattern's direction more often (54-56%), but any confirmed ZigZag pivot behaves the same way; the XABCD shape itself adds less than 1 pp

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9. 5.9

   Pivots and ZigZag: what automatic pattern detection rests on

   Understand that any automatic pattern detection is built on pivots, and why the left and right pivot lengths decide how many patterns you will see and how late

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10. 5.10

    Rectangle: a range between two boundaries

    Read a sideways range as a pattern of its own with two targets instead of one, and tell it apart from a triangle, whose boundaries converge

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11. 5.11

    The prior trend: no reversal pattern without it

    Check that there is something to reverse: two peaks in the middle of a range are not a double top, just two peaks

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12. 5.12

    The neckline and the measured target

    Draw the neckline through the right points and measure the target from the breakout point, not from the edge of the pattern

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13. 5.13

    Pattern life cycle: waiting, breakout, target, invalidation

    Track a pattern as an object with a state: until there is a breakout it is a candidate, not a signal, and it has an expiry date

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14. 5.14

    A forming pattern: wait for completion or enter early

    Understand the price of an early entry: an unfinished pattern gives a better entry and fails to confirm noticeably more often

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15. 5.15

    Overlapping patterns: which one takes priority

    Handle the case where the same peaks show a double top, a triple top and a head and shoulders at once, and choose by specificity rather than by whichever was found first

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