Harmonics – The Cypher pattern





                                         -A Forex Trading Perspective-

Like we have explained in our introduction to Harmonics -
https://tinyurl.com/y2ghjqkl, Harmonic Patterns enable traders to determine market turning points with precision and high accuracy levels.

And like all Harmonic Patterns, The Cypher has five points - namely, “XABCD”. As usual, the market will always provide “XA” which is the impulse leg/move. The trader is therefore required to find the remaining points namely; ‘BCD’.
 
Using the Fibonacci-retracement tool, you (the trader) measure and identify BCD points using the following measurement Criteria: -

>Point ‘B’ is 38.2 to 61.8 retracement of leg “XA”.

>Point ‘C’ is between 127.2 and 141.4 expansion of leg “AX”.

 >Point ‘D’ is 78.6 retracement of leg “XC”
 Important to note that; Point “D” is referred to as; Potential Reversal Zone (PRZ).
     
      It should equally be understood that all legs of the Cypher harmonic pattern should complete within the measurements, as provided in the criteria above. Otherwise it cannot be regarded as a valid Cypher harmonic pattern.

It is standard rule in all Harmonic patterns (the Cypher included) that; Stop Loss (SL) should be placed a few pips below point ‘X’.

In as far as profit taking is concerned, first Take Profit (TP) should be placed at point 38.2, and second Take Profit should be placed at 61.8.
      
      It is also very important that a trader knows; at What point to place a Trade, Where exactly to place a Stop loss and When to Take Profit.
     
     Apparently, the Cypher Harmonic pattern works well in a calm market, where for instance breaking news are not centre stage. In this regard, the Cypher could be perfect pattern for newbie traders.

OJ Mwale – Sani Global Forex

Images: Courtesy of BabyPips & TradingStrategyGuide

Comments

Post a Comment

Popular posts from this blog

Harmonic Patterns

Image
Harmonic Patterns – A Forex Market Trader’s Perspective – Harmonic patterns are formations on forex charts, created by price movements in the market. These patterns assist the trader to: – Analyze the forex market and forecast its price movement with precision therefore Determine potential trend-retracement areas (entry and exist points) with the highest possible accuracy. In other words ; Harmonic patterns use Fibonacci retracement levels to geometrically draw patterns that depict potential trend-reversal zones, thereby assisting the trader to precisely highlight the best trade entry/exit points. Due to their proven accuracy in pin-pointing potential trend-reversal zones in forex market, Harmonic Patterns are key (advanced) tools in the trader’s box. Harmonic Patterns are usually characterized by “M” (Uptrend) and W” (downtrend) shapes and can be categorized into Seven basic patterns: Gartley , Butterfly , Crab , Bat , Shark , Cypher and Deep Crab...
Read more

The Butterfly-Harmonic Pattern

Image
The Butterfly-Harmonic Pattern - Forex Trader’s Perspective - As explained in our introduction , Harmonic Patterns use Fibonacci retracement tool, to enable the trader determine turning points (trend reversal zones) with nearest accuracy. All Harmonic Patterns are shaped in a zigzag formation, “M” shape depicting an uptrend and a “W” depicting a downtrend. The Butterfly like all Harmonic patterns, has five points - namely, “XABCD”. As always, the market will provide the “XA” leg – being the impulse leg or move. The trader therefore is expected to identify the remaining “BCD” points. Therefore, using the Fibonacci retracement tool, you can measure and identify “BCD” points based on the following measurement guidelines or Criteria : - Plot the Fibonacci from peak of to the lowest point on the chart, then identify: - 1) Point B: Which should be at around level 78.6, retracement of leg “XA”. 2) Point C: Which should be between 38.2 and 88.6, retr...
Read more

The BAT Harmonic Pattern

Image
                                         - A Forex Trader’s Perspective - As explained in our introduction to Harmonic Patterns, the Gartley and Butterfly, Harmonic Pattern enable the trader to determine turning points with precision 80% of the time - according to expert traders. As is the case with all Harmonic patterns, the BAT harmonic pattern has five points - namely, “XABCD”.  The market will always provide  points “XA”, which is the impulse move and the longest leg in this pattern. And as usual, the trader is required to find the remaining “BCD” points. Therefore using the Fibonacci-retracement levels, the trader is required to identify BCD points, guided by the following measurement Criteria : - >Point ‘B’ is 38.2 to 50.0 retracement of leg “XA...
Read more