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The Cypher Harmonics pattern is a 4 leg reverse pattern. The frequency of appearance of this pattern is much less when compared to the other pattern. This is owing to the fact that the market, in general, finds it difficult to satisfy these rigid ratios.
The Cypher Harmonics pattern should fulfill the below mentioned Fibonacci levels:
- AB= should be in the range of 0.382-0.618 Fibonacci retracement of XA swinging leg.
- BC=should extend to a minimum of 1.272 as well as a maximum of 1.414 of XA leg.
- CD=must retrace to the 0.786 of XC leg.
Trading the Cypher Harmonic Pattern
In order to trade the Cypher Harmonics pattern in a manner that minimizes your risk as well as maximizes your profits, you must buy when the CD leg has reached 0.786 level of the Fibonacci retracement of XC. Next, you need to identify the point where you would place your stop loss order. In the case of Bullish Cypher Harmonics pattern, you should consider placing your stop loss order right below X point. If there is a break below that level then the pattern will automatically become invalid.
Finally, it is also important that you identify the Take Profit zone. Since Cypher pattern can be a reversal pattern, traders must focus on capturing the maximum that they can from the fresh market trend. In the case of Cypher trading pattern, you must Take Profits after A point has been reached in that particular pattern. As far as all the Harmonics pattern is concerned, it is always recommended that the traders lock in their profits as quickly as possible. Also, because the Cypher pattern is an extremely profitable pattern, traders can consider taking profits early.
To sum up, the Cypher Harmonic pattern strategy is pretty simple and straightforward. However, despite the fact that it offers huge winning ratios in comparison to other patterns, it is rarely visible on charts. This implies that traders must focus on realizing the full benefits of all the instances that present themselves.