This is was provided by Islam Khaled and it is a very comprehensive and yet very easy to use indicator. It is based on the use of Fibonacci and the zigzag indicators. The incorporation of this two indicators makes it one of the most outstanding indicator there is for the intraday traders. It mainly focusses on trading the retracements.
What are forex retracement? Retracements are movements that occur after the market have move over a long distance either upwards or downwards. In most cases these retracements make many traders to make losses since the traders to become confused. You find traders placing order at the beginning of retracements since the trader doesn’t know whether to the market trend is continuing or not. Also sometimes you will find traders placing opposite trades when it is too late into the market retracement. However, with this Harmonic Patterns1 indicator, the trader can comfortably trade without the fear of getting entangled into the forex retracements.
The Harmonic Patterns1 indicator forms/draws zigzag lines according to the way the market is expected to swing. The line of the zigzag changes their color between red and blue. If the general trend is downwards, then the zigzag lines will be red in color while if the general market prices trend is upwards, the zigzag lines will be blue. Therefore apart from benefiting from the zigzag swings, the trader can also hold his or her trades for a long period of time until the color of the zigzag line changes. For example if a trader places a sell order and the level that he or she had targeted is reached, the trader can still maintain the sell order until the color of the zigzag line changes to blue.
But if the trader wants to open trades and take short profits, he is also welcomed to using this indicator. The indicator shows the approximate level at which the market swing is set to reverse. It displays/forms dotted triangles which the trader can use to set stop losses and take profits.
Then this indicator also displays an arrow showing the trend direction. If the trend is up the indicator will display an arrow showing ‘Trend Up’ and vice versa.
How to open positions using the Harmonic Patterns1 indicator.
The trader should open buy orders when there is a ‘Tend Up’ arrow, and if the zigzag lines are blue. The trader should then set his or her stop loss at the previous low as indicated by the zigzag lowest recent turning point. The taker profit should be placed at the most reasonable and easily attainable level. You can use the Fibonacci levels to decide where to place your take profit.
The trader should open sell orders when there is a ‘Tend Down’ arrow, and if the zigzag lines are red. The trader should then set his or her stop loss at the previous high as indicated by the zigzag highest recent turning point. The taker profit should be placed at the most reasonable and easily attainable level. You can use the Fibonacci levels to decide where to place your take profit.
Example of trades opened using the Harmonic Patterns1 indicator.
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