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Using Harmonic Ratios to Identify Patterns and Project Reversal Zones

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Summary

This document explains a chart indicator for identifying harmonic patterns from manually placed XABCD points and searching for potential reversal zones (PRZs). Its pattern database specifies ratio ranges for several named formations, including Bat, Gartley, Crab, Butterfly, and variants. Users can supply their own database file and set how many records the indicator reads.

The interface can search for possible patterns, move point D, toggle display, change pattern coloring, and position XABC near chart highs or lows. To project a possible PRZ, the user places a D marker to the right of the latest candle; its position relative to C determines the search direction, while an ON marker sets the requested number of zones. The document describes indicator operation and ratio definitions, but gives no performance evidence or rules for validating signals. Pattern matches and projected zones should therefore be treated as technical-analysis outputs, not demonstrated forecasts.

Key ideas

  • The indicator compares manually positioned XABCD points with ratio ranges in a configurable harmonic-pattern database.
  • The database includes multiple named pattern families and can be replaced with a user-provided file.
  • A search control looks for possible patterns, while other controls adjust point placement and display.
  • A D marker placed beyond the latest candle directs the indicator to search for potential reversal zones.
  • The document provides usage instructions but no evidence that identified patterns predict profitable trades.

Tags

Technical indicatorsMean reversion

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.