Tuesday, June 21, 2011

Harmonic Patterns In The Currency Markets | investopedia.com

Harmonic Patterns In The Currency Markets:
The Bat Pattern
"Combine Geometry and Fibonacci Numbers
Harmonic trading combines patterns and math into a trading method that is precise and based on the premise that patterns repeat themselves. At the root of the methodology is the primary ratio, or some derivative of it (0.618 or 1.618). Complementing ratios include: 0.382, 0.50, 1.41, 2.0, 2.24, 2.618, 3.14 and 3.618. The primary ratio is found in almost all natural and environmental structures and events; it is also found in man-made structures. Since the pattern repeats throughout nature and within society, the ratio is also seen in the financial markets, which are affected by the environments and societies in which they trade." (Don't make these common errors when working with Fibonacci numbers - check out Top 4 Fibonacci Retracement Mistakes To Avoid.)

The Bottom Line

Harmonic trading is a precise and mathematical way to trade, but it requires patience, practice and a lot of study to master the patterns.

Read more: http://www.investopedia.com/articles/forex/11/Harmonic-Patterns-In-The-Currency-Markets.asp?partner=YahooEA#ixzz1PsGZRdTx

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