Pattern Rocognition Indicator (s) - page 6

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hi，Fxbaja,thank you for your reply information，but i find it's very difficult to know which price is the buying or selling position，Can you help me ? thank you.

 

Yes that one also triggers on what I guess can be termed "non-conforming" patterns. Carney has his own scanner, but is not compatible with MT4, and requires E-Signal feed.

These patterns of course were developed during the stock and commodities only days. However, one can try trading currency futures, with something like Carney's scanner.

Otherwise we need to scrutinize each pattern to make it conforms to what we are looking for.

 

The Swings are X-A-B-C-D.

Point D is suppose to be the area of entry, but we have discussed using a cross-over to enter. Point D is lower right hand corner of the right wing for bullish patterns, and upper right corner for bearish patterns.

The distance between points are fib numbers or squared numbers. The important thing to realize is that Point D can extend further to the next fib or squared number. This means there will be some false signals. That's why an entry trigger should be used.

The upper left of chart describes what type of pattern it is. "Bullish" mean to BUY. Bearish = SELL.

 

digital,

If you read the user manual, I think you can adjust it to trigger on fib ratios you want. I think it's in the 2nd pdf. Kind of hard to read some of it due to translation, but you should be able to manage.

 

Here's an article that might help some viewers:

Gartley Pattern Trading Made Easy - Trading Business Blog GoldenWire.com

 

The CFD SPX500, which is similar to the S&P 500 Futures, closed the week in a 1-Hour Bullish Butterfly pattern as attached.

Post #14 has diagram of a perfect Bullish Butterfly, per Guru Carney.

Watch Point D as the low on Friday was a ratio of 1.81, thus its imperfection. There also was a significant bounce up during last hourly candle of week.

The SPX500 also had a 30-min pattern. Check both out before they disappear.

 

May 27th Bearish Bat on EUR/USD 4-hour chart.

The attached chart also has the perfect pattern according to the person that discovered it, Mr. Scott Carney of Harmonic Trader.

HarmonicTrader.com - The Bat Pattern

We can see which parts that might not conform. Carney ranks the Leg D retracement of X-A being .886 as the most important. Although the ZUP states that it triggered at.854, it was at .886.

The Carney pattern has a range which is acceptable between certain points. I'm going to quote Mr. Carney so there is no mistake from the tranfer of info:

"The Bat pattern is a precise harmonic pattern discovered by Scott Carney in 2001.

The pattern incorporates the 0.886XA retracement, as the defining element in the Potential Reversal Zone (PRZ). This part perfect - fxbajaThe B point retracement must be less than a 0.618, preferably a 0.50 or 0.382 of the XA leg. This part explained below - fxbaja

The Bat utilizes a minimum 1.618BC projection. This part exceeds 1.618 - fxbaja

In addition, the AB=CD pattern within the Bat is extended and usually requires a 1.27AB=CD calculation. This is weakest part of May 27th EUR/USD ZUP pattern - fxbaja

It is an incredibly accurate pattern and requires a smaller stop loss than most patterns."

****

This ZUP pattern today is not bad at all. The leg X-B is preferably .382 or .50. When we plot a retracement on the 4-hour, we can see that the close of the 16:00 candle indeed very close to .382.

The weakest part pertains to Carney's statement regarding 1.27 AB=CD.

We employed the fib expansion tool to plot the ABC. The result was that in order to comply with Carney's 1.27, which is the FE 127, the pullback from B to C must be .236 (23.6%). This in itself conflicts with Carney's pattern diagram that requires .382 to .886.

Our final judgement is that this ZUP pattern is good. Stop-loss above yellow line in red box on ZUP, which is the 261.8% extension of D-C, or above Leg X.

ZUP also shows trend line from May 11th 08:00 candle high, which may be another reason it triggered prior to .886 on Leg D. We also mentioned this high/trend line on a short trade comment. Look at daily chart.

This ZUP pattern can also be seen on the 1-Hour chart. As with all patterns, it will disappear as soon as new calculations are made.

Any market moving news over the weekend will affect price. Some brokers don't allow trading at Sunday 19:00 open, but a few hours later.

Targeting profit levels include plot of retracement. From Leg C to Leg D results in the 38.2% of 1.41910 at previous pivot on May 26th. Add fibo fan A-D.

We would also move the fibo fan's low pointing down. Here is plot on 1-hour:
High = May 13th 07:00 1.43136
Low = May 25th 07:00 1.40122 (Swing C on Bearish Bat).

The alternative low for a tighter retracement plot is May 26th 15:00 low 1.40670.

PSQ9 will lend S&R. We'll try to post chart with fibo fans, horizontal retrace fibs, etc. when time allows.

 

The curious part of Mr. Carney's Bat is his comments about the 127 AB=CD.

If he meant "within the pattern" to be a set of ABC swings besides the major pattern's ABC, then we have an interesting observation:

Let's use the 1-hour.

A = May 25th 07:00 low 1.40122

B = May 26th 07:00 high 1.41952

C = May 26th 15:00 low 1.40670

FE 127 = 1.42998 which is just about top for Leg D.

Edit: Having read Mr. Carney's AB=CD on his web site, it is different from the way we use it, A-B = C-D.

His extension is measured from from Leg C to Leg B. In any case, there doesn't seem to be possibility of compliance with this in the May 27th pattern.

 

Visit the A-B-C-D thread in this Tutorial section for follow-up on price activity pertaining to last post and the Bearish Bat pattern.

These patterns are essentially trading the bounce or reversals off of fib extensions. The different type of patterns have criteria for other legs.

We cautioned that a new week's open can contain adverse reaction due to news that may have transpired over the weekend. As it turned out, EUR/USD gapped up upon opening.

Read the A-B-C-D thread for details on how the trade scenario works out, etc.

 

Previous to the more recent Bearish Bat, there was a 1- hour chart Bearish Gartley on May 26th 12:00. We display this as well as pasted the perfect pattern per guru Carney.

This May 26th pattern did not conform to Mr. Carney's prerequisite that Point B shall be a 61.8% retracement of the x to A leg.

The Point D (upper right hand corner of right wing) also did not conform. It was a 61.8% retrace of X-A instead of 78.6%.

All that said, there was a substantial retrace off of that pattern of approximately 135 pips.

We need to repeat the difference in terminology when speaking about extensions. The Carney and ZUP often refer to Leg D extensions of the D-C leg. When we speak about extensions, it is off of A-B or FE levels derived from ABC plots.

As we had initially advised, there will be few perfect patterns found in major forex pairs on a regular basis.

Note that the yellow horizontal fibs was plotted by ourselves and not generated by the ZUP. We can see the current top at a fib, the 261.8%, from A-B. The previous referenced Bearish Bat had its Point D at the 200%. The just discussed Bearish Gartley had its Point D at the 138.2.

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