Basic Trading Strategy using the Harmonic AB = CD + Fibonacci Pattern - Crypto Academy / S4W2 - Homework Post for [@lenonmc21]

josantos (67)Beginner[2,4,5,6,7]in SteemitCryptoAcademy • 3 years ago

My very good people,
It is indeed another great privilege for us as students to be in attendance in this very amazing program that has really shaped the life of many who has in one way or the other attended the program. The steemitblog in her wisdom brought this program to educate each and everyone of us most especially we the newbies in the crypto world. Today the professor @lenonmc21 delivered a very interesting and educative lecture on the topic Basic Trading Strategy using the Harmonic AB = CD + Fibonacci Pattern. And I am glad to be in attendance in his lecture. My homework task is what I am presenting below.

Questions: Theory

Define in your own words what Harmonic Trading is?
Define and explain what the pattern AB = CD is and how can we identify it?
Clearly describe the entry and exit criteria for both buying and selling using AB = CD pattern?

Question: Practical(Only use your own image)

Make 2 entries (up and down) on any crypto currency pair using the AB = CD pattern confirming it with Fibonacci.

Define in your own words what Harmonic Trading is?

In every market, there is always movement, cycles or trend. The market is not stagnant that is it is always in a motion. As we always see in the chart pattern where you see price fluctuating, going up or down depending on the market situation at that point. We can therefore say Hamnic trading is the continuous repeatation of the movement of price of an asset since the price is not always fixed. Now a good example of Harmonic trading was given in the lecture by the professor where he said as a child you are born, then what follows is that you grow I.e ageing and after sometimes you will cease to exit. The same thing is applied in the case of Harmonic trading. A trend is formed and what follows is a movement which may be in bearish or bullish format and after that that procedure repeats it self. This is the only movement that can be found in the market as well.

Harmonic trading can simply be said as the repeatation of the movement of a trend in the market. If the market makes an uptrend or bullish movement, there is always going to be a downtrend movement to pull it back and a similar uptrend movement has to be made to also pull it up again. So we see Harmonic trading as this movements. Though this movement are similar, but in which ever case they can never be the same.

Define and explain what the pattern AB = CD is and how can we identify it?

The AB = CD pattern in Harmonic trading is a pattern that was discovered by HM Gartley. HM Gartley is a technical analyst when it comes to market price movement. According to the pattern, there are four different movement that is the A, B, C and D. This pattern is always seen in wave like motion and it spot a buy entry and also a sell and exit entry. Traders can easily buy their asset in the buy entry section where the price is low and then sell it when the price raises at the sell entry point.

I will be explaining below how to identify this pattern in both bullish and bearish market trend. So let's get started in the case of bullish market first.

From the bullish point of view, to identify the Harmonic trading using the AB = CD pattern, the price of the asset must be in a downtrend movement. It must be going downward to be able to find the next bullish movement. When this points are picked up together or are identified, the next thing is to check and be sure that the points selected are valid enough. And to be able to check the validation of this points, the following has to be taken into consideration.

Source

Between point A and B there should be no other movement that should go beyond it.
The point C should always be lower than the point A and the Fibonacci of the point should be between 61.8% - 78.6% when considering movement between line AB
Similarly point D should be between 127.2% and 161.8% of Fabonacci when considering movement between line BC

From the bearish point of view, to identify the Harmonic trading using the AB = CD pattern, the price of the asset must be in an uptrend movement. It must be going upward to be able to find the next bearish movement. When this points are picked up together or are identified, the next thing is to check and be sure that the points selected are valid enough. And to be able to check the validation of this points, the following has to be taken into consideration.

Source

Between point A and B there should be no other movement that should go beyond it.
The point C should always be higher than the point A and the Fibonacci of the point should be between 61.8% - 78.6% when considering movement between line AB
Similarly point D should be between 127.2% and 161.8% of Fabonacci when considering movement between line BC

Clearly describe the entry and exit criteria for both buying and selling using AB = CD pattern?

The entry criteria for both buy and sell are seen below.

Identify the four points A, B, C and D.
Check to see that point C is between 61.8% - 78.6% of Fabonaci retrenchment.
Check to see that point D is between 127.2% - 161.8% to verify validity of pattern.
If the rules above are met and the price begin to form a bearish candle we enter a buy entry.
If the rules above are met and the price begin to form a bullish candle we enter a sell entry.

The exit criteria for both buy and sell are seen below.

Stop loss is set in other to exit the market. In the case of this pattern a 2% stop loss is set right above or below the point D. This is to reduce the amount of loses and take profit profit is always set at the beginning and risk should always be at the ratio of take profit and stop loss. 1:1 or 2:2 risk ratio is always advisable.

Make 2 entries (up and down) on any crypto currency pair using the AB = CD pattern confirming it with Fibonacci.

Here in this section, I will be entry both the sell (short) and the buy (long) using the AB = CD pattern.

Buy entry

Source

Sell entry

Source

Conclusion

I want to say this is totally a new pattern for me. I have actually known that price moves continuously but I never understood the concept of harmonic trading as regards the AB = CD pattern but thanks to the professor @lenonmc21 for such an amazing lecture. I have gotten the idea and I do hope to learn more from you in no distance time.

#lenonmc21-s4week2 #cryptoacademy #pattern-abcd #trading #nigeria #krsuccess