Harmonic Patterns

Harmonic Patterns are geometric price structures defined by specific Fibonacci ratios between four price legs (XABCD). Each named pattern. Gartley, Butterfly, Bat, Crab, Cypher, Shark. is identified by the precise retracement and extension ratios that relate its four swings. The discipline is mathematical: a setup either fits the ratio tolerance (typically ±3%) or it doesn't, and approximate patterns significantly underperform strict-ratio ones in published studies.

The entry on every harmonic pattern is the D-point completion, where the last leg reaches its defining Fibonacci extension. Stops go beyond the X point; targets retrace toward C or A. The strategies here cover the five most-traded variants: the classical Gartley (0.618 XA retracement at D), the aggressive Butterfly (1.27 XA extension), the high-probability Bat (0.886 retracement, tightest stop), and the crypto-favorite Cypher. Harmonic patterns work best when the D-point aligns with an independent structural level. A prior swing, a supply/demand zone, a higher-timeframe Fibonacci cluster. Harmonic signals fired at random chart locations without structural confluence have historically underperformed simple trend-following; treat the ratios as necessary but not sufficient, and require a second confirmation source.