Bearish Cypher Pattern

The Bearish Cypher Pattern belongs to the Harmonic pattern family. Just like all the others.

But what exactly makes this one special?

Is it the fact that you can use it across various financial markets? Or the fact that it’s an easy-to-use strategy?

Find out all about the Bearish Cypher pattern below.

What is a Cypher Pattern?

As we mentioned earlier, the Cypher pattern is a five-point Harmonic pattern and a commonly used reversal strategy.

It focuses on describing the highs and lows of a security as well as revealing the trends of the market.

Although unpopular, it remains to be a very reliable and beginner-friendly strategy.

What is a Bearish Cypher Pattern?

Just like all the other harmonic patterns, a bearish or bullish cypher pattern may arise.

Let’s focus on the downward patterns for now.

The bearish Cypher pattern target is known to be a downward price movement and a signal to buy. It acts as a support and resistance level for your investments.

This pattern indicates the great possibility of prices falling within a short period of time. And allows investors to take advantage of the situation and profit from it.

It resembles the letter W and is focused on points X, C, and D. And opens with leg XA.

How To Identify a Bearish Cypher Pattern?

Aside from resembling the letter W, the bearish Cypher pattern makes its high at point X and its low at point C. It ends on the rising point D and indicates an incoming plummet.

And just like all harmonic patterns, these also use Fibonacci numbers and ratios.

This is where the bearish cypher pattern rules come from. For a pattern to be bearish, it must follow these rules:

  1. A retracement range of 38.2% to 61.8% should be observable from points XA moving to point B
  2. Point C must have an extension of 113% to 141% to points XA

Example of a Bearish Cypher Pattern

The Cypher pattern success rate depends on a bearish and bullish Cypher pattern target.

Trading a bearish pattern requires traders to take their positions once point D reveals itself.

If the market prices go against the predictions of the Cypher pattern, a trader may either wait for the pattern to fully develop or not enter the trade.

bearish cypher pattern


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