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Technical analysis

Harmonic patterns

By Jarosław Wasiński • Published: • Updated:
A family of geometric patterns, including Gartley, Bat, Butterfly and Crab, describing swing relationships using specified ratios. They commonly use XABCD points and a Potential Reversal Zone. Definitions and tolerances must be explicit. Mathematical regularity proves neither a market reaction nor an edge in the complete strategy.
Example. For hypothetical X = 1.1000 and A = 1.1200, a 61.8% XA retracement gives B = 1.10764. A 78.6% retracement gives D = 1.10428. These illustrate Gartley-related proportions; without the other points and relationships they do not establish a complete pattern.

Names and defined versions

Gartley, Bat, Butterfly and Crab patterns use different ratio structures. For an XABCD method, specify each leg, tolerance and swing-identification rule. Do not apply one ratio set to every pattern. Authors’ literature documents conventions rather than independently demonstrates the profitability of each trading rule.

PRZ expresses a hypothesis

A Potential Reversal Zone combines selected projections or retracements. Several nearby levels derive from related geometry and are not independent evidence of a future reaction. Reaching a PRZ does not complete a trade specification: entry conditions, point-D availability and invalidation remain necessary. A projected level can be missed or crossed.

Control retrospective fitting

Broad tolerances, wick selection and later anchor changes can multiply attractive historical examples. Keep all candidates, including unfinished, expired and losing cases. If swings require later bars, incorporate the recognition delay. Net results on data not used for development matter more than the pattern’s visual regularity; changing tolerances creates a new variant to evaluate.

Source of the definition

Scott Carney: Harmonic Trading — definitions, not independent performance evidence. Documentation of the construction or concept is not a guarantee of strategy results.

FAQ

Are two correct ratios sufficient?
No. A pattern requires its complete relationship set and point-selection rules.
Is the PRZ a guaranteed reversal zone?
No. It is a candidate reaction area under the stated method.

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Jarosław Wasiński

Editor-in-chief, ForexMechanics.com • Macro & FX analyst

Independent analyst and practitioner with over 20 years of experience in financial markets. Actively involved in Forex since 2007, with a focus on fundamental analysis, OTC market structure, and disciplined capital risk management.

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