# Harmonic Patterns Cheat Sheet: A Trader’s Guide

Harmonic trading patterns are technical analysis tools that help traders identify turning points and reversal opportunities in the financial markets. By learning how to spot harmonic patterns on price charts, traders can improve their timing on entries and exits. Follow my Harmonic Patterns Cheat Sheet below!

This comprehensive harmonic patterns cheat sheet covers the most popular harmonic patterns, how they are identified, and how to effectively trade them. You can just read on to enhance your technical analysis skills.

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## What are Harmonic Patterns?

Harmonic patterns are based on Fibonacci numbers and ratios. The Fibonacci sequence is a series of numbers where each number is the sum of the preceding two numbers (1, 1, 2, 3, 5, 8, 13, 21, 34…). These numbers create ratios like 0.618, 1.618, 2.618 etc. that are prevalent throughout nature and financial markets.

Harmonic patterns use Fibonacci ratios to identify turning points in price action. The patterns are formed through a sequence of structures that foreshadow a reversal. By learning to recognize these chart formations, traders can take advantage of turning points.

Let’s take a look at some of the most common harmonic patterns:

## Gartley Pattern

**Identification:**

- X to A leg: Retracement of 0.618 of prior up/down move
- A to B leg: Retracement of 0.618 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 0.786 of X to A leg
- D completes pattern at 0.618 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 2-3 pips above point D
- Take profit at 1.27 or 1.618 extension of X to D leg

**Notes:**

- Most accurate if found on larger time frames (4H, Daily, Weekly)
- Lookback period minimum 30 bars recommended
- AB=CD is ideal ratio but not required

**Example:**

Gartley Pattern Example

## Butterfly Pattern

**Identification:**

- X to A leg: Retracement of 0.786 of prior up/down move
- A to B leg: Retracement of 0.382 to 0.618 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 1.27 or 1.618 of X to A leg
- D completes pattern at 0.786 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 3-5 pips above D point
- Take profit at 1.27 or 1.618 extension of X to D leg

**Notes:**

- Accuracy increases if found on larger timeframes
- CD leg should not exceed AB leg
- Ideal ratios: AB=CD, BC=0.382 to 0.618 of AB

**Example:**

Butterfly Pattern Example

## Bat Pattern

**Identification:**

- X to A leg: Retracement of 0.382 to 0.50 of prior up/down move
- A to B leg: Retracement of 0.382 to 0.886 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 0.886 of X to A leg
- D completes pattern at 0.886 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 3-5 pips above D point
- Take profit at 1.27 or 1.618 extension of X to D leg

**Notes:**

- Most accurate on shorter timeframes
- BC projection is less important
- CD leg should not exceed AB leg

**Example:**

Bat Pattern Example

## Crab Pattern

**Identification:**

- X to A leg: Retracement of 0.382 to 0.618 of prior up/down move
- A to B leg: Retracement of 0.382 to 0.618 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 0.618 to 0.786 of X to A leg
- D completes pattern at 0.618 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 2-3 pips above D point
- Take profit at 1.27 or 1.618 extension of X to D leg

**Notes:**

- Most accurate on shorter timeframes
- CD leg should not exceed AB leg
- Ideal ratios: AB=CD, BC=0.382 to 0.618 of AB

**Example:**

Crab Pattern Example

## Shark Pattern

**Identification:**

- X to A leg: Retracement of 0.382 to 0.618 of prior up/down move
- A to B leg: Retracement of 0.382 to 0.5 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 1.13 to 1.618 of X to A leg
- D completes pattern at 0.886 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 3-5 pips above entry
- Take profit at 1.13 or 1.618 extension of X to D leg

**Notes:**

- Most accurate on 4 hour and daily timeframes
- CD leg should not exceed AB leg
- Ideal ratios: AB=CD, BC=0.382 to 0.5 of AB

## Wolf Pattern

**Identification:**

- X to A leg: Retracement of 0.382 to 0.618 of prior up/down move
- A to B leg: Retracement of 0.382 to 0.5 of X to A leg
- B to C leg: Equal to A to B projection
- C to D leg: Equal to 1.27 to 1.618 of X to A leg
- D completes pattern at 0.786 of X to C leg

**How to Trade:**

- Entry at D completion
- Stop loss 2-3 pips above D
- Take profit at 1.27 or 1.618 extension of X to D leg

**Notes:**

- Look for pattern on H4 and Daily timeframes
- BC projection less important
- CD leg should not exceed AB leg

**Example:**

Wolf Pattern Example:

## Advanced Harmonic Trading Strategies

Now that we’ve covered identification of the main harmonic patterns, let’s discuss some trading strategies to use them effectively:

**Confirmation**

Wait for a break and close above or below the potential reversal point to confirm the pattern before entering. This avoids false breaks.

**Trend Filter**

Trade harmonic patterns only in the direction of the prevailing trend. This improves probability of continuation versus reversal.

Access my advanced Chart Patterns PDF Course

**Cluster Trading**

Look for clusters of multiple harmonic patterns completing around the same price zone for confluence.

**Fibonacci Extensions**

Use Fibonacci extensions for profit targets rather than fixed take profit pips. Extensions provide logical areas for price to reverse again.

**Risk Management**

Use tight stop losses of 2-5 pips to define risk. Move to breakeven once price moves in your favor. Manage risk on every trade.

**Harmonic Patterns Cheat Sheet Scaling In**

Consider scaling in to increase position size as the pattern completes and price confirms the reversal. This can boost gains.

In summary, harmonic trading takes practice but can significantly improve chart analysis skills. Use the patterns in this cheat sheet in conjunction with confirmation, trends, and risk management for optimal trading.