The Bearish Harmonic Pattern — Global Trading Software

Bearish Harmonic Pattern

Every trader has unique trading strategies that help them analyze the market. And one of the most crucial parts of any strategy is the chart patterns, particularly the harmonic patterns. When used correctly, harmonic patterns can help us determine the pricing trend and new trading opportunities.

So, let’s dive right in…

What Is a Harmonic Pattern?

Traders love harmonic charts, and they have used them for years. And that’s because they help them accurately predict future market movements. These patterns take the geometric price pattern to another level while guaranteeing you ROI.

The harmonic patterns use the Fibonacci numbers to determine the exact turning point.

What Is a Bearish Harmonic Pattern?

A bearish trader believes the financial market will drop, so they look for opportunities to ride the trend downwards. Fortunately, bearish harmonic patterns indicator can help confirm their suspicion. After all, a bearish harmonic pattern shows an uptrending market that’s about to take a downturn.

But the bullish and bearish harmonic patterns follow similar rules.

For instance, a simple harmonic pattern like the Gartley pattern can improve your trades. When the market is about to take a bearish turn, then the pattern will be a “W” while a bullish turn is an “M.” So the bull pattern will follow the bearish harmonic patterns rules but move in the opposite direction.

How to Identify a Bearish Harmonic Pattern?

There are several harmonic patterns that can help you identify a bearish market. These patterns have one thing in common; they do form a “W.” They follow the XA, AB, BC, and CD pattern that guarantees you entry at extreme lows and highs.

A bearish harmonic pattern starts with a dip from X to A. this will be followed by a rise in price and then a slight decline before the sharp rise to D. But BC should never extend beyond AB. With a butterfly pattern, BC should be between 0.382 and 0.886 retracement of the AB.

Example of a Bearish Harmonic Pattern

A great example of a bearish harmonic pattern is the butterfly pattern which forms when the price drops from X to A. The up-wave (AB) should be 0.786 retracements of the previous wave. BC should fall between 0.382 and 0.886 retracement. The below example is taken from our Auto Harmonic Pattern Trading Indicator for the TradingView Platform. It is available for many platforms HERE

Finally, CD should never be over 2.24 extension of AB.

bearish butterfly pattern

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