Trade precise geometric price patterns defined by Fibonacci ratios.
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Overview
Harmonic patterns are geometric price structures that incorporate Fibonacci ratios to identify potential reversal zones with exceptional precision. Developed by H.M. Gartley in 1935 and later extended by Scott Carney, these patterns require every leg of the structure to conform to specific Fibonacci relationships β making them one of the most objective pattern-based trading approaches.
The four most traded harmonic patterns are: the Gartley (38.2% XA retracement at B, 61.8β78.6% at D β the "Potential Reversal Zone"); the Bat (50% retracement at B, 88.6% at D β a deep, precise pattern); the Butterfly (78.6% at B, 127.2β161.8% extension at D β trades beyond the original X point); and the Crab (61.8% at B, 161.8% at D β the most extreme pattern, offering the widest reversal zones).
All patterns follow the same XABCD structure. Point X is the origin; A is the first significant move; B retraces A; C retraces B; D is the completion point (the Potential Reversal Zone) where the trade is entered. The critical measurement is the XA leg: all other legs are defined as Fibonacci ratios of XA.
The PRZ (Potential Reversal Zone) at point D is the entry area. Traders look for reversal confirmation candles (pin bars, engulfing patterns) within the PRZ before entering. Stop-losses are placed beyond the outer boundary of the PRZ. Targets are the BC leg midpoint and the A level.
Strategy Code
This is a TradingView Pine Script strategy example for this page concept. Paste it into the TradingView Pine Editor, add it to your chart, and run it in the Strategy Tester.
//@version=6
strategy("Harmonic Pattern Strategy", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript strategy example for this page concept. Open thinkorswim, create a custom strategy, paste the script, and apply it to your chart.
input fastLength = 20;
input slowLength = 50;
def fastMA = ExpAverage(close, fastLength);
def slowMA = ExpAverage(close, slowLength);
def buySignal = fastMA crosses above slowMA;Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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