Download MetaTrader 5

Indicators: Harmonic Pattern Finder V2 - page 3

To add comments, please log in or register
Andre Enger
1439
Andre Enger  
NormanK:

In this case, if the drop happen. when the line change to solid line( as pattern confirm) ?

 

Thanks

That depends on the ZigZag settings - if they are very coarse (e.g. FastZZ with 200$ swingsize) then no, because the ZigZag would not notice the drop. With normal settings yes.

The pattern would be drawn first as solid plus a horizontal PRZ stop line to indicate the end of the pattern. This indicates a pending unconfirmed pattern, if the price were to drop further below the horizontal PRZ stop line the pattern would be removed from the chart as a failed pattern. If instead the price reverses inside the PRZ zone (the ZigZag changing direction there) the pattern would always be drawn as solid but the PRZ stop line removed, as the pattern is no longer pending but confirmed. 


NormanK:

Meanwhile, how can i determine the emerging projection line and the one Ahead projection line?

Thx

One ahead projections are the projected patterns with the most recent (possibly to be changed if the price continues) ZigZag top/bottom as a C-point, and a D point projected in the opposite direction. Emerging projections have their C point as one of the earlier tops/bottom with the D point projected as an extension of a later swing.

davesarge1
89
davesarge1  

Hello,

I downloaded the indicator and have a lot of questions about its funcionality, but I will only ask the most important one just now :)

When a Pattern is projected, is the indicator looking for the ideal Fibonacci ratios at point D?  Because when I examine the projected ratios, they do not concur with the ideal ones.  For example, the indicator shows projected Bullish Crab with XAD ratio of 152.  I would be looking for the XAD at 161.8.  Likewise a Bullish Gartley with XAD 61, when it should be 78.6. I have noticed similar strange projected BCD ratios.

Or am I interpreting the indicator ratios incorrectly?

Thanks,

David

davesarge1
89
davesarge1  

Also, I don't understand all the different kinds of AB=CD patterns.  Could you explain what are Rec. AB=CD patterns?   And the difference between rangelike and trendlike, #1 and #2, and ideal and perfect? 

Finally, a suggestion, to include 1.618 AB=CD in a future version?

Many thanks.

Andre Enger
1439
Andre Enger  
davesarge1:

Hello,

I downloaded the indicator and have a lot of questions about its funcionality, but I will only ask the most important one just now :)

When a Pattern is projected, is the indicator looking for the ideal Fibonacci ratios at point D?  Because when I examine the projected ratios, they do not concur with the ideal ones.  For example, the indicator shows projected Bullish Crab with XAD ratio of 152.  I would be looking for the XAD at 161.8.  Likewise a Bullish Gartley with XAD 61, when it should be 78.6. I have noticed similar strange projected BCD ratios.

Or am I interpreting the indicator ratios incorrectly?

Thanks,

David


Hello David,

The pattern descriptor for the Crab pattern is

PATTERN_DESCRIPTOR crab=         {0.382,0.618,0.382,0.886,2.24,3.618,1.618,1.618,0,0,0,0,0,0 };

The 7th and 8th positions encode the XAD minimum and maximum permitted ratios, and both are 1.618 in this case. Because the numbers are equal, the indicator will apply the unary slack value which is 0.1 at default, resulting in a zone from 1.518 - 1.718 (1.618 +- 0.1), consistent with what you observe. So you could try to decrease this value in the settings for a more strict comparison with the ratios.

On the other hand the Gartley has

PATTERN_DESCRIPTOR gartley=      {0.618,0.618,0.382,0.886,1.272,1.618,0.786,0.786,0,0,0,0,0,0};

which gives a zone between 68.6 - 88.6 with the default slack values. So you should NOT have seen a Gartley with XAD at 61 unless you have increased the slack value in the settings. Are you sure this was not one of the other ratios? Or that it was not a Max Gartley? Because the Gartley do have XAB and ABC which includes 61. If not it would be appreciated if you could send information to reproduce the erroneous occurrences (instrument + time).

In simple terms the indicator calculates such a zone based on all provided ratios, and takes their intersection (if existent) as a "harmonic window" where the pattern converges. The two edges of this window is where the projection starts and PRZ ends respectively.

davesarge1:

Also, I don't understand all the different kinds of AB=CD patterns.  Could you explain what are Rec. AB=CD patterns?   And the difference between rangelike and trendlike, #1 and #2, and ideal and perfect? 

Finally, a suggestion, to include 1.618 AB=CD in a future version?

Many thanks.

Coarsely speaking, an AB=CD must have a C point retracement between 0.382 - 0.886, and a corresponding D-point in 1.13 - 2.618. However if you then just have "universal" AB=CD encoded with these ratios you will get an AB=CD on almost every jerk in the prices. The essence of the AB=CD is that the AB segment and the CD segment must be equal, primarily in price secondly in time. Therefore if the distance from A to B is 300 pips, so should the difference between C and D. In turn this implies that an ABC ratio of 0.382 requires the corresponding BCD ratio 2.618, 0.5 requires 2.0 and so on. The patterns are defined on the special harmonic numbers in the interval, and named accordingly (trendlike is long since the price has followed a trend, rangelike is short since the price has moved in what looks like a range):

  • Trendlike 1: ABC = 0.382, BCD = 2.618
  • Trendlike 2: ABC = 0.5, BCD = 2.0
  • Perfect: ABC = 0.618, BCD = 1.618
  • Ideal 1: ABC = 0.707, BCD = 1.41
  • Ideal 2: ABC = 0.786, BCD = 1.27
  • Rangelike: ABC = 0.886, BCD = 1.13

Rec. stands for "Reciprocal" and are the AB=CD ratios obtained by flipping the numbers around, ABC ratio to BCD ratio. So the C-point retraces beyond the A-point in these cases.

davesarge1
89
davesarge1  

Hi Andre,


Many thanks for your reply - that has answered my doubts very clearly. 

So if I understand correctly, this projected point D is an intersection (like an average price) of the ratios and that is why the ratios of each leg may be a little out? 

You say the indicator calculates a zone based on all the ratios, but I only see a single point D for the projected patterns.  If price reaches this point, then the PRZ stop appears.  Perhaps it could be helpful to show a projected PRZ of the point D as a zone, if and when the ideal ratios are within an acceptable points distance?  This way when price enters the zone, i.e. tests one of the ratios, we can be prepared for a trade.  Many times price does not reach the projected point D, but may have tested a valid ratio.


Finally, I have noticed that the indicator projects the Alt Bat, but not the standard Bat.  Is there any reason for this?


Thanks,

David

p.s. I attach a screenshot to illustrate both of my points (single point for D/no PRZ zone and Alt Bat instead of Bat)

Files:
Andre Enger
1439
Andre Enger  
davesarge1:

Hi Andre,


Many thanks for your reply - that has answered my doubts very clearly. 

So if I understand correctly, this projected point D is an intersection (like an average price) of the ratios and that is why the ratios of each leg may be a little out? 

You say the indicator calculates a zone based on all the ratios, but I only see a single point D for the projected patterns.  If price reaches this point, then the PRZ stop appears.  Perhaps it could be helpful to show a projected PRZ of the point D as a zone, if and when the ideal ratios are within an acceptable points distance?  This way when price enters the zone, i.e. tests one of the ratios, we can be prepared for a trade.  Many times price does not reach the projected point D, but may have tested a valid ratio.


Finally, I have noticed that the indicator projects the Alt Bat, but not the standard Bat.  Is there any reason for this?


Thanks,

David

p.s. I attach a screenshot to illustrate both of my points (single point for D/no PRZ zone and Alt Bat instead of Bat)

Point D is an intersection in a set-theoretic sense, like the part which is common/shared between all zones. I've tried to illustrate using paint how this works on the Gartley, which have two ratios to be satisfied w.r.t. point D and the rest:

  1. It must lie at 0.786 of XA, which is "zonified" using unary slack 0.1 to 0.686 - 0.886. This is the yellow part of the figure.
  2. It must lie at 1.272 - 1.618 of BC, which is "zonified" using range slack 0.01 to 1.262 - 1.628. This is the blue part of the figure.

Therefore a valid point D is in the common part of the two zones above, shown as the green part in the figure.


This also explains why the price may test a valid ratio without reaching the projected point, because it must be within acceptable distance from all ratios to constitute a PRZ test. For example, if the blue part in the figure above was to only start after 0.786, or the middle of the yellow part so to speak.

It could be helpful yes to show the entire PRZ even before price testes it, but could also clutter the screen. If you know how to code it should not be to hard to modify the indicator as you see fit, e.g. adding patterns like 1.618 AB=CDs is quite easy and something I've done myself. Also other stuff like making a pattern protrude if double clicked, collecting statistics, etc. But I would not upload a V3 for these minor things, only perhaps if it was added consideration of time-symmetry aspects and more core harmonic trading stuff. Still this is yet to be done and not something I'm in the process of doing.

The Alt Bat has different ratios than the standard bat, so it often occurs that there is an alternate bat without a standard one.

davesarge1
89
davesarge1  
Andre Enger:

Point D is an intersection in a set-theoretic sense, like the part which is common/shared between all zones. I've tried to illustrate using paint how this works on the Gartley, which have two ratios to be satisfied w.r.t. point D and the rest:

  1. It must lie at 0.786 of XA, which is "zonified" using unary slack 0.1 to 0.686 - 0.886. This is the yellow part of the figure.
  2. It must lie at 1.272 - 1.618 of BC, which is "zonified" using range slack 0.01 to 1.262 - 1.628. This is the blue part of the figure.

Therefore a valid point D is in the common part of the two zones above, shown as the green part in the figure.


This also explains why the price may test a valid ratio without reaching the projected point, because it must be within acceptable distance from all ratios to constitute a PRZ test. For example, if the blue part in the figure above was to only start after 0.786, or the middle of the yellow part so to speak.

It could be helpful yes to show the entire PRZ even before price testes it, but could also clutter the screen. If you know how to code it should not be to hard to modify the indicator as you see fit, e.g. adding patterns like 1.618 AB=CDs is quite easy and something I've done myself. Also other stuff like making a pattern protrude if double clicked, collecting statistics, etc. But I would not upload a V3 for these minor things, only perhaps if it was added consideration of time-symmetry aspects and more core harmonic trading stuff. Still this is yet to be done and not something I'm in the process of doing.

The Alt Bat has different ratios than the standard bat, so it often occurs that there is an alternate bat without a standard one.

Hi Andre,


Many thanks for taking the time to reply to me, I really appreciate these explanations.


I do understand the nature of the PRZ in Harmonic trading, and how important it is to identify the different levels within it.  But I also the believe the PRZ is exactly that - a zone, which begins when the first ratio is reached.  As I'm sure you know, Harmonic patterns are rarely perfect, and often complete before or after all levels in the PRZ have been hit.  I really think you're coding is fantastic and the idea of finding a "common" price among the levels does make for a simplified version of the PRZ.  But as a purist I would like to see those levels separately to make the call for myself :)


And yes, being able to highlight a pattern, especially when there are multiple projected patterns, would be fantastic.  I don't know how to code, but I do have a friend who could help me with this.


All the best!

David

Andre Enger
1439
Andre Enger  
davesarge1:

Hi Andre,


Many thanks for taking the time to reply to me, I really appreciate these explanations.


I do understand the nature of the PRZ in Harmonic trading, and how important it is to identify the different levels within it.  But I also the believe the PRZ is exactly that - a zone, which begins when the first ratio is reached.  As I'm sure you know, Harmonic patterns are rarely perfect, and often complete before or after all levels in the PRZ have been hit.  I really think you're coding is fantastic and the idea of finding a "common" price among the levels does make for a simplified version of the PRZ.  But as a purist I would like to see those levels separately to make the call for myself :)


And yes, being able to highlight a pattern, especially when there are multiple projected patterns, would be fantastic.  I don't know how to code, but I do have a friend who could help me with this.


All the best!

David

Hello again,

I welcome your constructive feedback and should you have further questions feel free to ask.

As a side note, I would not consider a ratio outside the validity zone as being part of the PRZ because the defining rules of the pattern are not all satisfied. If the price were to reverse there, in retrospect you could not say that the pattern had even formed in agreement with the defined rules.

With purist I take that you interpret 1.272 – 1.618 as “1.272, 1.41, or 1.618” instead of a range of acceptable values, and therefore would be less inclined to trade a Gartley with BCD ratio 1.35 but more keen on a 1.25. In this case it could be beneficial to split the encoded Gartley pattern definition into three separate definitions, call them e.g. Gartley #1, #2, and #3, where the interval is replaced with the appropriate number. Also then take care to replace the ABC ratios from the range 0.382 – 0.886 to single numbers, those harmonic numbers which ensures an AB=CD substructure taking into account the BCD ratio. Of course this procedure could be repeated on several of the patterns. Alternatively you could do as I tend to do: verify the standard patterns with a separate AB=CD and manually check the ratios before a trading decision.

Regards,

André

davesarge1
89
davesarge1  
Andre Enger:

Hello again,

I welcome your constructive feedback and should you have further questions feel free to ask.

As a side note, I would not consider a ratio outside the validity zone as being part of the PRZ because the defining rules of the pattern are not all satisfied. If the price were to reverse there, in retrospect you could not say that the pattern had even formed in agreement with the defined rules.

With purist I take that you interpret 1.272 – 1.618 as “1.272, 1.41, or 1.618” instead of a range of acceptable values, and therefore would be less inclined to trade a Gartley with BCD ratio 1.35 but more keen on a 1.25. In this case it could be beneficial to split the encoded Gartley pattern definition into three separate definitions, call them e.g. Gartley #1, #2, and #3, where the interval is replaced with the appropriate number. Also then take care to replace the ABC ratios from the range 0.382 – 0.886 to single numbers, those harmonic numbers which ensures an AB=CD substructure taking into account the BCD ratio. Of course this procedure could be repeated on several of the patterns. Alternatively you could do as I tend to do: verify the standard patterns with a separate AB=CD and manually check the ratios before a trading decision.

Regards,

André

Hi André,


Yes, that is exactly what I do.  I have one chart with the indicator set to identify the 5 point patterns, and another chart open with the indicator only identifying the AB=CDs.  So I nearly always look for an AB=CD completing near the PRZ, and if it can be an AB=Cd within the C-D leg of the pattern even better. 

Congratulations again on the indicator!


David

davesarge1
89
davesarge1  

Hi André,


Another idea for improvement of the indicator (as well as the 1.618 AB=CD and click on Pattern to highlight) would be to show the price next to the point D levels.  For example: "D Projected Bullish Cypher 110.821" on the attached chart.  Just now I have to change from cursor to cross hair on MT5 in order to see what the projected price is.  I am checking patterns on all timeframes and it would be great to just see the price next to the projected point D.

Thanks,

David

Files:
To add comments, please log in or register