The Harmonic Pattern Recognition Indicator MT4 helps you identify potential Harmonic patterns that may occur in the future based on historical price data. This allows you to make better decisions on setting take-profit / stop-loss levels or spotting new entry opportunities.
This is one of the indicators that truly surprised IndicatorShare during our review process because of its powerful and extensive features.
Introduction to Harmonic Pattern Recognition Indicator MT4
Once installed, this indicator will automatically detect and draw Harmonic patterns on your chart.
You can easily turn the indicator on or off with a single button located at the bottom left corner of the screen.
The chart below shows the price action of the CADCHF pair on the H1 timeframe:
Let’s take a deeper look at the chart above as an example. Since this indicator displays a lot of information and can look a bit overwhelming at first, try to follow along carefully.
At the bottom right corner of the chart:
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The yellow circle is the current market price zone.
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The purple circle is the predicted price of the indicator, meaning the price is likely to continue moving down to the purple circle zone to complete the Harmonic pattern.
Your actions:
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Wait for an opportunity to enter a SELL order and take profit at the price zone in the purple circle, or
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Wait for the price to move down to the purple circle area and then look for a reversal entry (BUY).
Thus, the function of the Harmonic Pattern Recognition Indicator is to help you identify Harmonic patterns that may occur in the future based on historical price data, so that you can make decisions on take-profit/stop-loss or look for entry opportunities.
Returning to the example in the chart above, now we will move forward by several dozen H1 candles and see if the price moves according to the prediction.
Thus, from the yellow circle, the price moved up a little further before actually going down with a strong SELL wave, and the price went all the way down to the blue circle area, which is lower than the forecast (the Harmonic Pattern Recognition Indicator predicted the price would go down to the purple circle).
Through this example we can see that this indicator works quite accurately, right? And please note that these pattern forecasts are predictions of a price zone, not an absolutely exact number.
Let’s continue with the same example, now with a zoomed-in image:
As you can see, when the price dropped sharply down to the blue circle area, it then bounced strongly back up to the orange rectangle area. Traders who waited for the price to fall to the purple/blue circle in order to look for a BUY reversal entry all gained quite good profits.
Harmonic Pattern Recognition MT4 – On Which Timeframe?
You should use this indicator on higher timeframes, at least H1. This indicator gives you a good overall view on H1, H4, D1.
You should switch to the larger timeframes mentioned above to look for price zones where entry opportunities are likely to appear. Then mark them, and finally switch to a lower timeframe to look for an entry point more precisely.
Some other information about the Harmonic Pattern Recognition Indicator – the indicator that helps identify Harmonic patterns
To use this indicator most effectively, you need to firmly grasp the theories surrounding the topic of Harmonic patterns. Only when you truly understand them can you apply the Harmonic Pattern Recognition Indicator well in finding trade entry opportunities.
Harmonic Pattern (also known as Harmonic pattern models) are price patterns invented and studied by trader H.M. Gartley since the 1930s. Although at first these patterns were mainly used in the stock market, nowadays they have been widely applied to many different markets, including the currency market.
Harmonic Patterns are constructed using Fibonacci ratios in calculations, and they also reflect crowd psychology in the trading market.
There are many types of Harmonic patterns, but fortunately you don’t need to master all of them to be able to use Harmonic Patterns. Below are 5 Harmonic patterns you need to firmly grasp if you want to trade using this method:
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AB=CD pattern
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Butterfly pattern
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Crab pattern
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Bat pattern
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Gartley pattern
To study Harmonic patterns in more detail, you can refer to this document I found on the internet.
Final Conclusion
IndicatorShare evaluates this as a very good indicator for Harmonic Patterns. This review was written after a short period of getting familiar with this indicator, so shortcomings are inevitable. If you like the topic of Harmonic Patterns and trade based on them, download this indicator right away to explore further — it surely will not disappoint you.
