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Harmonic Trading

Metatrader (MT4/MT5) Indicator

"Harmonic Trading profits from the natural order of the financial markets."
- Scott M. Carney
Are you an harmonic trader? The PZ Harmonic Trading indicator is probably the most complete harmonic patterns auto-recognition indicator, and takes fibonacci projections as seriously as you do.
  • Detects Bat, Gartley, Crab, Butterfly, Cypher and Shark patterns
  • It plots primary, derived and complementary Fibonacci projections
  • It evaluates past price action and displays every past pattern
  • It plots all the pattern ratios on the chart
Inspired by Scott M. Carney's book "Harmonic Trading Vol1", this indicator has been designed to fulfill the needs of the most purist and exigent harmonic traders.
  • Fibonacci projections are vector-independent
  • It implements email/sound/push alerts
  • It plots the AB=CD projection
Enhance your trading activity with the best Harmonic Patterns auto-detection indicator, just like our customers have already done.
  • Lifetime software updates and support
  • Current version is 1.0 (Updated November 2013)
Harmonic Trading for Metatrader4
$299
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  • Need help? Watch the tutorial. Too much trouble? Use the buy directly button below.
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    Who is this tool for?

    The PZ Harmonic Trading indicator has been crafted for educated harmonic traders who are looking for a top-notch indicator, and are tired of useless "fancy triangles" indicators.

    What this tool is not

    This indicator is not suitable for uneducated traders, or those who don't know what harmonic trading is. It is not a trading system nor a signals indicator. What is harmonic trading?

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    How to trade

    A brief introduction

    Harmonic Trading is a methodology that utilizes the recognition of specific price patterns and the alignment of exact Fibonacci ratios to determine highly probable reversal points in the financial markets. This methodology assumes that trading patterns or cycles, like many patterns and cycles in life, repeat themselves. The key is to identify these patterns, and to enter or to exit a position based upon a high degree of probability that the same historic price action will occur. Although these patterns are not 100% accurate, these situations have been historically proven. If these set-ups are identified correctly, it is possible to identify significant opportunities with a very limited risk.

    The Potential Reversal Zone (PRZ)

    The concept of the Potential Reversal Zone (PRZ) was originally outlined by Scott M. Carney in his book, "The Harmonic Trader".

    History has proven that a convergence of Fibonacci numbers and price patterns provides a highly probable area for a reversal. This area of convergence is called the potential reversal zone. When three, four, or even five numbers come together within a specific area, you must respect the high probability for some type of reversal.
    - Scott M. Carney (The Harmonic Trader)

    A Potential Reversal Zone (PRZ) represents the critical areas where the flow of buying and selling is potentially changing. These harmonic zones attempt to identify the price levels where imbalanced overbought and oversold situations are reversing back to their respective equilibrium level.

    An ideal reversal usually tests all of the price levels in the Potential Reversal Zone (PRZ) on the initial test. The predominant trend usually reverses from this initial test of the entire PRZ and continues in the reversal direction shortly thereafter. In an ideal reversal, the price bar that tests all of the fibonacci projections in the PRZ is called the Terminal Price Bar.

    The trade must be taken when the Potential Reversal Zone (PRZ) has been tested and rejected by a Terminal Price Bar or a strong breakout has taken place in the reversal direction without testing all the PRZ levels. The farthest price level of the PRZ or the Point X of the pattern are suitable stop-loss levels.


    Harmonic Trading Ratios

    The indicator calculates all the important fibonacci ratios for the XA and BC vectors of the pattern, and plots them by the Point D if applicable.

    Primary Ratios
    Directly derived from the Fibonnaci Number Sequence.
    - 0.618 = Primary Ratio
    - 1.618 = Primary Projection
    Primary Derived Ratios
    - 0.786 = Square root of 0.618
    - 0.886 = Fourth roof of 0.618 or Square root of 0.786
    - 1.130 = Fourth root of 1.618 or Square root of 1.27
    - 1.270 = Square root of 1.618
    Complementary Derived Ratios
    - 0.382 = (1 - 0.618) or 0.618²
    - 0.500 = 0.770²
    - 0.707 = Square root of 0.50
    - 1.410 = Square root of 2.0
    - 2.000 = 1 + 1
    - 2.240 = Square root of 5
    - 2.618 = 1.618²
    - 3.141 = Pi
    - 3.618 = 1 + 2.618
    Watch the video!

    Take a look at the video in which I explain how does the indicator work, how to use it, what makes it especial and how properly identify potential reversal zones.



    Trade Execution

    Once a pattern is detected, the following steps have to be taken, which can lead to take or discard the trade. Bear in mind that a pattern is not valid by itself and it can expand as long as it likes. Your job has an harmonic trader is to assess the validity of the pattern and the potential reversal zone before entering the market.

    1. Pattern Recognition
    This indicator auto-detects and alerts harmonic patterns.
    2. Find the Potential Reversal Zone (PRZ)
    Evaluate the fibonacci projections plotted on the chart by the indicator and look for strength signs. Can you find at least three converging projections? Do you see primary ratios? Is the AB=CD projection present?
    3. Wait until the PRZ is rejected by the market
    The PRZ can be tested and rejected by one single Terminal Price Bar, or the market can reverse and breakout the PRZ without testing all the fibonacci projections. In any case, the market has to move before you take the trade. You are a follower, not a predictor.

    4. Enter the market setting the proper stop-loss
    Trade the breakout or the rejection of the PRZ and set the proper stop-loss. The farthest price level of the PRZ or the Point X of the pattern are suitable stop-loss levels.
    5. Position Management
    It is recommended to reap partial profits as soon as possible to lock into a free ride. Scott M. Carney proposes a very interesting position management system based on a 0.382 Trailing Stop, measured from the reversal point to the reversal extreme.

    The Potential Reversal Zone (PRZ) is a crucial element in Harmonic Trading. Hence the importance of vector-independent primary, derived and complementary fibonacci projections, which all other harmonic indicators ignore completely.

    Some trading examples

    The following are trading examples using Harmonic Patterns. The trade is taken when the Potential Reversal Zone (PRZ) is rejected.

    >Bullish Shark Pattern - EURUSD (D1)
    Bullish Shark Pattern - EURUSD (D1)
    >Bearish Cypher Pattern - EURUSD (D1)
    Bearish Cypher Pattern - EURUSD (D1)
    Bearish Gartley Pattern - GBPCHF (D1)<
    Bearish Gartley Pattern - GBPCHF (D1)
    Bearish Cypher Pattern - EURUSD (D1)
    Bearish Cypher Pattern - EURUSD (D1)
    Bullish Gartley - EURUSD (D1)
    Bullish Gartley - EURUSD (D1)
    Bullish Gartley - EURUSD (D1)
    Bullish Gartley - EURUSD (D1)
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    Settings

    The indicator parameters

    When loading the indicator to any chart, you will be presented with a set of options as input parameters. Don't despair if you think they are too many, because parameters are grouped into self-explanatory blocks.

    Indicator Settings
    The indicator is constantly looking for tops and bottoms. The amplitude is the minimal amount of bars where there will not be two tops or two bottoms. Increase the period to see bigger patterns or for intraday trading. Enable OnlyPerfectPatterns to display only perfect and pure harmonic patterns, with perfect ratio measurements. The MaxHistoryBars parameter controls how many past bars are examined to minimize memory usage.
    Colors
    Choose your own pattern colors.
    Labels
    Enable or disable labels and choose your own label color.
    Ratios
    Enable or disable ratios and choose your own ratio color.
    Projections
    Display or hide the fibonacci projections on the chart
    Alerts
    Enable display/email/push/sound alerts for patterns.
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    Frequently asked questions

    I don't know how to trade harmonic patterns. Do you have a manual or documentation?
    There is a great manual, but we didn't write it. Get your hands on Harmonic Trading Vol. 1 by Scott M. Carney and learn how to use this indicator before purchasing it.
    Seriously? Do I really have to read that long book?
    Yes, you probably do. If you are not willing to read a trading book, perhaps trading is not for you at all. Our indicators are tools, but they won't replace your lack of knowledge.
    Does the indicator repaint?
    Yes, it does. The last point of the wave can expand as long as it likes, therefore the indicator must repaint. It is your job as an harmonic trader to assess the validity of the Potential Reversal Zone (PRZ) and wait until it has been rejected to take the trade properly.
    Which is the recommended exit strategy?
    Scott M. Carney recommends closing the trade partially and applying a 0.318 trailing stop measured from the reversal point to the reversal extreme.
    I want to see only perfect patterns!
    No problem! Enable the OnlyPerfectPatterns input parameter.