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1. Define in your own words what harmonic trading is?
The term harmonic trading simply means “re-doing” in more like a particular cycle, sequence or pattern. In other words, simply put Harmonic trading means repetition.
For harmonic trading to occur, several patterns have to be put in place and these patterns have to be in constant repetition. Once a particular pattern has occurred before or has been followed, the next trade would be based on the previous pattern.
And more so, certain specific conditions must be met for the trades to go on smoothly.
2. Define and explain what the pattern AB=CD is and how we can identify it?
AB =CD is a harmonic trading pattern that is discovered by H.M. Gartley. The pattern originated from 4 basic movements which were commonly called A,B,C and D.
H.M. Gartley one of the greatest precursors of technical analysis used these movements and decided when to buy a trade or perform a sale operation based on the wave movement and the Market price.
The pattern AB=CD is solely identified by the Fibonacci tool. This pattern is really good for taking good buy and sell operations in the market and there are different rules for different setup be it bearish and bullish and we will look at the conditions below
3. Clearly, describe the entry and exit criteria for both buying and selling using the AB=CD pattern?
When buying;
a. The price must be falling. That is when the market is undergoing a downtrend.
b. There should be no intermediate movements between points A and B.
c. Point C must be below A.
d. C must be between 61.8% and 78.6% of the Fibonacci retracement tool with regards to points A and B.
e. Point D should be between 127.2% and 161.8% of the Fibonacci retracement tool drawn from points B and C.
When selling;
a. The price of the market must be rising positively.
b. There should be no intermediary movement between points A and B.
c. Point C should be above A.
d. Point C should be between 61.8% and 78.6% of the Fibonacci retracement drawn from the AB movement.
e. Point D should be between 127.2% and 161.8% of the Fibonacci retracement deduced from points BC.
4. Make 2 entries (Up and down) on any cryptocurrency pair using the AB=CD pattern confirming it with Fibonacci
BUY TRADE
first of all we identified a downtrend market and then marked out our four points :A,B,C,D, and then we worked to verify if the points met our requirement using the Fibonacci tool and we can see how the point c was between 61.8% and 78.6% and the D point is between the necessary level too so we take the trade
then we put the stop loss below D and targetted at least 1;1 r;r; target and we saw price move from there and go up
SELL TRADE
Same thing here, we identify an uptrend then we look for the four points based on the rules and regulations and we found the points then using fibonacci tool we confirmed the trade
then we take the trade seeing that the work has met all condition then we took a sell trade putting our stop loss above D
The result was price moving down drastically from there
CONCLUSION
In the picture we learnt about trading repetition of patterns which is harmonic trading and how to trade the AB=CD pattern and the conditions it must meet to be confirmed Thank you @lenonmc21 for this wonderful class on harmonic trading. A very good lecture cant wait for the next one