Discussing the article: "Introduction to MQL5 (Part 22): Building an Expert Advisor for the 5-0 Harmonic Pattern"

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Check out the new article: Introduction to MQL5 (Part 22): Building an Expert Advisor for the 5-0 Harmonic Pattern.

This article explains how to detect and trade the 5-0 harmonic pattern in MQL5, validate it using Fibonacci levels, and display it on the chart.

The 5-0 Harmonic Pattern is a reversal formation that usually emerges following a significant and prolonged price movement. It is seen as a continuation-to-reversal pattern rather than a pure reversal setup and indicates a possible shift in the trend's direction. Four legs (XA, AB, BC, and CD) are formed by the pattern's six primary points: 0, X, A, B, C, and D. The distinctive beginning point and structure of the 5-0 pattern set it apart from other harmonic patterns. In contrast to most harmonic patterns, which start with a swing high or low, the 5-0 pattern starts with a corrective move, which frequently occurs after a prior trend or pattern has finished. This makes it stand out because it aims to capture the depletion of a countertrend move rather than the beginning of a new impetus.

Point 0, which creates a clear swing high on the chart, is where the bullish 5-0 pattern starts. The market drops from this level to form point X, which is the structure's first significant bearish leg. A corrective retreat of that decline is represented by the subsequent movement from X to A. Even though there is no set Fibonacci level for this retracement, point A needs to be below point 0 to indicate that the trend is still bearish overall.

Following the establishment of point A, the market descends further to produce point B, which is situated between the XA leg's 113% and 161.8% Fibonacci extension. The exhaustion stage of the current downtrend is frequently represented by this leg. The market turns back up from point B to form point C, which usually represents 161.8% to 224% of the AB leg. Within the pattern, this movement demonstrates a powerful corrective reaction. The structure is completed at point D, where the market pulls back once more. It is recommended that Point D retrace 50% to 55% of the BC leg. The possible buying area is this retracement zone.

Author: Israel Pelumi Abioye

[kimo161]

Eliot waves?

Yes, they're Eliot waves. And don't invent new entities, William Occam disapproves.

[Ryan L Johnson]

kimo161 #:

Eliot waves?

Yes, they're Eliot waves. And don't invent new entities, William Occam disapproves.

It's more nuanced than that. Harmonic patterns, including the 5-0 Pattern (Trademark Status & Document Retrieval), were invented after Elliot Waves were invented. Elliot Waves are based on 9 degrees of waves in cycles, while the 5-0 Pattern is based on Fibonacci ratios. There is bound to be some overlap when both patterns are applied to a chart--which can lead to confusion.