Trading based on harmonic formations largely depends on proper measurement of Fibonacci retracement in relation to price movements.


A description of all the formation can be found in the article: Harmonic Trading – Most Efficient Patterns. Harmonic formations are patterns of continuation of the trend. For this reason, it is important that the movement we expect is consistent with earlier trend. The most effective is the formation, whose point D falls on significant support/resistance.

ABCD on USDTRY

From the high from January when USDTRY pair reached 3.9414, price is gradually falling. Interestingly the downward movement is often interrupted by easy-to-see ABCD simple corrections. They can be seen when the graph creates a dynamic movement opposite to the trend (AB segment) which is momentarily corrected (BC). Then the last line (CD) ends this movement and price returns to an earlier trend.

Great advantage of this formation is that it is known in both harmonic trading and Elliott wave theory, and the direction the trader will open positions is consistent with previous (major) trend. Situation is extremely comfortable when the said formation has equal sections of AB and CD, which was just repeated in a short time on USDTRY.

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Another bearish ABCD on USDTRY

At the beginning of June USDTRY pair formed ABCD and at the equality AB = CD price reacted with declines. Since then passed a week and USDTRY has started to draw another formation. This time, when equality of segments AB = CD was reached, the reaction was no longer so violent, but at the end bears took initiative over again.

ABCD na USDTRY H1
ABCD na USDTRY H1

Due to this formation, USDTRY is expected to fall further, including reaching new low. It is worth watching this pair in the future because for almost six months movements on it are very technical.

ABCD na USDTRY dla H4
ABCD na USDTRY dla H4

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