The Best Forex Patterns

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GBPCHF,H4

Harmonic patterns and Elliott waves.

Elliott waves and harmonic patterns are two most important technical analyses in order to predict the currency and stocks’ market. Many traders are using these analyses to be more successful. Although, these technical analyses are separated and different from each other but in fact they cooperate very well in the market. For example, a Harmonic Gartley pattern, most of the times, forms in the second wave of an advanced wave which, in fact, is the correction of the first wave movement. This formation happens several times in charts and at the same time sends good signals to technical traders.The following chart is GPB/CHF currency pairs in 4h time frame which shows the above point perfectly. However, A harmonic pattern’s expert can easily determine and draw this pattern which consists of X,AB,C,D points. When the point D is forming, a movement in the fifth advanced wave is also forming (from D to E). This simultaneous formation duplicate the importance of Crab pattern. These 5 waves, which are in complete accord with the Eliot’s rules, are determined by the green color:

 

1. The third advanced wave is not the smallest wave.
   
2. The fourth wave has an acceptable overlap with the first wave.
   
3. The corrective wave of number 2 has a good reversal. (The second wave cannot start correction until the first one starts)
   

 

Another important point is the clarity state of fifth wave which confirms and issues the end of main fifth wave.

 

5 to 5

In studying Eliot’s wave, when we want to open a position unlike the current trend, it is logical to get a confirmation from the fifth wave. This confirmation is the internal counting of fifth advanced wave. When a trader counts the fifth wave correctly and according to the Eliot’s rules, he will have a successful trade.In this chart, the internal counting, which is according to the above rules, is determined by the blue color. Finally, it shows that the completion of these five waves is finished with a smaller ratio in the main fifth wave.

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Forex Analysis

The Best Forex Patterns

A buying opportunity in EURCAD currency pairs

 

 

The following chart is about EURCAD currency pairs in 1 hour time frame which according

 

to the technical analyses and their indicators we can expect a good buying opportunity.

 

This buying opportunity appears several times in this chart.

 

 

Harmonic pattern of AB=CD

 

The main technical pattern in this example is the harmonic pattern of AB=CD which has the ideal ratios of 127.2=78.6. This pattern is one of the strongest reversal patterns which mostly forms during the price corrections. Other important ratios of this pattern are 161.8=61.8 or 200=50 which they have golden ratios.

 

Candle stick patterns

 

In forming the D dot, the formation way of the candlestick patterns is very important. In this example, the formation way of the candles shows that a bottom price is formed and the falling of the prices is stopped. Among the formed candles, there is an inverted hammer candle stick pattern which shows the possibility of stopping of price falling as you can see in the picture.

 

Observing the fifth waves of Eliots’ waves pattern

 

Type of formed candlestick patterns with the important pattern of AB=CD is a very important warning about the rising of the price. At this time, another technical analysis, Eliots’ waves, reinforces this rising of the price. On the CD side of AB=CD pattern you see a movement of the fifth wave of Eliots’ wave which obeys all of the important rules of the Eliots’ waves and also issues the end the falling process. The combination of the Eliots’ waves and harmonic patterns provide a clear analysis of the market for the traders.

 

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A good selling opportunity in the CAD/JPY currency pairs

 

The following example is the analysis of CAD/JPY in daily time frame. By using this analysis, a trader can understand about the possibility of the price falling in the next days or weeks and also use this knowledge in his trading. In the chart, we specified 4 important technical reasons for starting of the price falling on 31st of October.

 

1. Formation of the third point of descending trend’s line
   
2. Formation of long shadows in candles in the third point of descending trend’s line
   
3. The ideal pattern of AB=CD
   
4. Third point standing in the Fibonacci’s corrective levels
   

 

Formation of the third point of descending trend’s line

 

The price range on 31st of Oct is under the influence of descending trend’s line which consists of two price peaks number 1 and 2. The role of this line is preventingmore ascending in the price. When the price reaches this line, the first warning of ending of the ascending process will be issued.

 

 

Formation of long shadows in candles in the third point of descending trend’s line

 

As it is indicated in the picture (green area), when the price reaches the descending trend’s line, we see the formation of long shadows in the candles. This formation shows the importance of this line and also it shows that buyers should be careful about their trading. So, a professional trader prefers to make cash his buying trades and leaves the stage. More addition, the long shadows indicate the exit of the buyers and therefor the sellers become stronger more.

 

 

The ideal pattern of AB=CD

 

As the third point of the descending trend’s line is formed, the harmonic pattern of AB=CD with the ideal ratios of 50 to 200 will form too. Accompaniment of this pattern and descending trend line is a clear warning of more descending of the price for the sellers.

 

 

Third point standing in the Fibonacci’s corrective levels

 

The third point of descending trend’s line is located in the range of corrective ratios of Fibonacci with the percentages of 50 and 38.2. These ratios are drawn from price peaks, 1and 2, and will influence the third point.

 

Written by the analytic team of FXMIM Company