Harmonic Trading - page 446

[carbonmimetic]

Thank you very much for your effort Gradaevus.....

I upload a little extract from Carney's Harmonic Trading vol 2 Advanced:

"The 5-0 pattern is a unique structure that possesses a precise alignment of Fibonacci ratios

to validate the structure. Although the 5-0 is considered a retracement pattern, as the 50%

retracement is the most critical number within the Potential Reversal Zone (PRZ), the

measurements of the various price legs are slightly different than the Bat or the Gartley. The

5-0 is within the family of 5-point harmonic price structures. However, the required B point

alignment for other patterns does not apply in the case of the 5-0. Rather, the 5-0 requires a

minimum Extreme Harmonic Impulse Wave of at least 1.618—but not to exceed 2.24—at the C

point to distinguish the setup. In addition, the 5-0 requires a Reciprocal AB=CD measurement

to define the pattern’s completion.

The basic premise of the pattern is to identify distinct reactions following the completion of a

contrary trend. Valid 5-0 patterns typically represent the first pullback of a significant trend

reversal. In many instances, the AB leg of the structure is a failed final wave of an extended

trend. Within Elliott Wave terms, the AB leg may be a failed wave 3 of a corrective “abc” or a

failed wave 5 of an entire completed trend. Although these are obvious similarities, from the

Harmonic Trading perspective, it is important to examine the structure via its relative Fibonacci

measurements to satisfy the pattern requirements. The 5-0 is an incredibly precise pattern that

possesses only two numbers—the 50% retracement of the BC leg and the Reciprocal AB=CD.

It is important to note that the measurements utilized to define the PRZ are different from all

other harmonic patterns in two distinct ways: the structural completion point of the final leg and

the calculation of the AB=CD pattern.

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EXAMPLE for AB-CD reciprocal::

[Aki Miu]

It looks very mathematical and intricate but it's very very informative. Perfect AB=CD and real AB=CD are the only AB=CD patterns I consider trading with because they are more accurate than custom AB=CD. I'll see if I can enhance my settings based on your info. Thank you grandaevus. You rock.

[carbonmimetic]

Basic 5-0 Requirements

Although the pattern incorporates 5 points within the structure (X, A, B, C, D), the initial price

leg (0) can start from the beginning of any extended price move. However, the initial point (X)

must possess a specific alignment with respect to the A and B point. The X, A, B formation of

the structure is usually some type of Extreme Harmonic Impulse move. The XA projection that

defines the B point ideally must not exceed a 2.24. Any extension greater than a 2.24 will

negate the structure, as smaller impulse moves are preferred. Again, this is the failed wave 3 or

wave 5—in Elliott Wave terms—that establishes the rest of the structure.

• Look for initial impulsive reversal at X, A, B points that possesses a 1.13-1.618

extension.

• The AB projection must possess a minimum 1.618 extension at the C point but

not exceed 2.24.

• The D point is defined by the 50% BC retracement and the Reciprocal AB=CD

pattern completion.

The BC leg is the longest price length of the structure that must be at least a 1.618

extension of the AB length, but it must not exceed 2.24. This tight range of 1.618–2.24 is a

defining element of the structure. If the 1.618 AB minimum extension is not reached, the

structure is not a valid 5-0. After the BC leg has reversed from that zone, the 50% retracement

is measured from the B point to the C point. In addition, the Reciprocal AB=CD is projected

from the C point (an equivalent length of the AB leg) to complement the PRZ.

Although the 5-0 pattern is not a typical M- or W-type price structure, the same principles

within the Harmonic Trading approach are applied to these situations. The Reciprocal AB=CD

helps define the general area, while the 50% retracement pinpoints the precise range of the

harmonic zone. The following illustrations and examples will clearly explain these concepts.

[carbonmimetic]

EXAMPLE for Bullish 5-0 Pattern:

[ozan]

RyuShin:
@grandaevus. Thank you for the update as always. I have a question, what are LegLengthDeviation and TimeDeviation exactly for? What do they do if I change the ratio of them?

Bullish Perfect AB=CD pattern on NZDUSD H1 time frame

Perfect AB=CD pattern is a very good example since indicator needs to use all types of deviations to detect perfect and/or real AB=CD patterns.

Perfect AB=CD pattern rules:

fib ret AC = 0.618

fib ret BD = 1.618

leg length of AB = leg length of CD

time AB = time CD

FibonacciDeviation = 0.05 means;

min Deviation= 1-FibonacciDeviation = 1-0.05= 0.95;

max Deviation= 1+FibonacciDeviation= 1+0.05= 1.05;

If fibonacci retracement of AC is between the ratios written below, then it will pass fib retracement check.

min = 0.618 * 0.95 = 0.5871

max= 0.618 * 1.05 = 0.6489

If fibonacci retracement of BD is between the ratios written below, then it will pass fib retracement check.

min = 1.618 * 0.95 = 1.5371

max= 1.618 * 1.05 = 1.6989

For maximum accuracy, I use maximum %5 deviation for fibonacci deviations where standard zup uses %7 - %9

LegLengthDeviation = 0.05 means;

min Deviation= 1-LegLengthDeviation = 1-0.05= 0.95;

max Deviation= 1+LegLengthDeviation = 1+0.05= 1.05;

(dot C - dot D) / (dot A - dot B) >= min Deviation

(dot C - dot D) / (dot A - dot B) <= max Deviation

dot C - dot D = 0.81025 - 0.79376 = 0.01649

dot A - dot B = 0.81616 - 0.80033 = 0.01583

(dot C - dot D) / (dot A - dot B) = 1.0416 so ratio is between 0.95 - 1.05

For maximum accuracy, I use maximum %5 deviation for leg length deviations (there's no equivalent setting in standard zups) . But if you want, you can increase up to %10.

TimeDeviation= 0.10 means;

For maximum accuracy, I use maximum %10 deviation for time deviations (there's no equivalent setting in standard zups)

min Deviation= 1-TimeDeviation= 1-0.10= 0.90;

max Deviation= 1+TimeDeviation= 1+0.10= 1.10;

timeCD / timeAB >= min Deviation

timeCD / timeAB <= max Deviation

To find the correct time values, wsv uses a unique approach . It counts the bars for each leg.

In our example it took 26 bars to form AB length.

So if bar count of CD is between (26 * 0.90 = 23) and (26 * 1.10 = 28), then time condition would be met.

min bar count of CD length is = 23 bars,

perfect bar count of CD length is = 26 bars,

max bar count of CD length is = 28 bars.

Indicator first counts AB length which is 23 bars, then starting from C point, it calculate the correct time to draw D bow, by adding 23-28 bars to point C .

As you can see from the picture

23rd bar time is friday 20:00

24th would be friday 21:00

but remember settings

FridayLastM1BarOpenTime = "N/A";

SundayFirstM1BarOpenTime= "N/A";

SundayFirstH4BarOpenTime= "N/A";

FridayLastM1BarOpenTime = "20:54" for my broker

so there can't be a 21:00 friday bar so indicator passes 21:00 , 22:00 , 23:00, and whole saturday and comes to sunday

SundayFirstM1BarOpenTime= "21:00";

SundayFirstH4BarOpenTime= "20:00";

so 24th bar is 21:00 sunday

25th bar is 22:00 sunday

26th bar is 23:00 sunday

27th bar is 00:00 monday

28 th bar is 01:00 monday

Because of this unique approach (bar counting and filtering holidays) wsv zup version is the only indicator than can detect perfect AB=CD & real AB=CD patterns, Elliott 5 Wave & that can find the correct D box time values of Navarro 200 pattern without using extra tools and/or indicators.

[ozan]

5-0 pattern detection difference between latest wsv55 - and older versions.

In older versions, these are the ratios that are used to detect 5-0 pattern.

As you can see from the picture, pattern is valid if

min ret XB is 1.128

max ret XB is 1.618

min ret AC is 1.618

max ret AC is 2.234

min ret BD is 0.500

max ret BD is 0.500

whatever the ret AC is (AC can be any value between 1.618-2.234, even a non standard fib ratio) , ret BD is a constant value which is 0.500.

In zupwsv55, reciprocals are used for AC & BD

Now, ret AC can't be any value between 1.618-2.234 (can be only 1.618, 2.000 or 2.234) and ret BD changes in accordance with ret AC.

ret AC = 1.618 ---> retBD = 0.618

ret AC = 2.000 ---> retBD = 0.500

ret AC = 2.236 ---> retBD = 0.382

[ozan]

Bearish 5-0 pattern on EurUSd H4 & D1

wsv55 uses 1.618 - 0618 reciprocal

[darren mookien]

grandaevus:
darren, could you please give some screenshots, so I can check. Thanks in advance.

ok on gbpcad 4hr, this is with ZUP 55

it doesnt cover the previous high on 4hr

Below is zup 53 + 5-0 new by porichuk

U notice it goes back a bit further to get the previous high

I went to the daily on ZUP 55 to get the previous high but it missed the point highlight by blue dot, so the pattern was a gartley but may be forming into a bat..but its not showing

Thanks

[Aki Miu]

grandaevus:
Bearish 5-0 pattern on EurUSd H4 & D1 wsv55 uses 1.618 - 0618 reciprocal

I see. That tells why there's a difference between wsv53 and wsv55.