The Harmonic Trading Strategy

Presenting a Discretionary Structured Trading Strategy

Trading strategies rarely rely on just one technique. Fundamental strategies may use a lot of financial ratios and cross-asset correlations to find opportunities, similarly, technical strategies may use multiple indicators and price action techniques to form one strategies which then is sprinkled with a touch of risk management to make it complete. This article discusses my main discretionary technical strategy which I have been using for years. The strategy is based on three elements, a Harmonic pattern, a moving average zone, and a standard RSI.

Harmonic Patterns

Harmonic Patterns are one of the powerful advanced price action techniques that are used to detect reactions. The thing that works about Harmonic Patterns is that they use the confluence method, meaning that they expect reactions from clusters of certain levels defined by Fibonacci retracements. The reason they work has nothing to do with mystic or magic whatsoever, it is simply the fact that Fibonacci retracements are used by many traders and their visibility makes reactions more likely, thus increasing the predictive power of the patterns.

However, only using Harmonic Patterns on their own might not be sufficient, they are best combined with contrarian…