Welcome! Dear Traders,you are reading my forex trading experiences. Forex trading is a very profitable and very risky business opportunity. If you are a beginner, calm down,have a cup of coffee, and convince yourself that you need to study hard to win in forex trading. Obviously, the task is not easy as the statistics claim that only 5% traders win in forex trading. If you are determined, serious,and hard working, you can surely be included in the group of winners.

HOW TO TRADE BEARISH CYPHER HARMONIC CHART PATTERN?

yourFXguide-In my last post, I wrote about cot report analysis, and today I was supposed to write my fourth posts on cot report analysis. But one of my twitter followers requested me to write this post about bearish cypher harmonic chart pattern. Bearish cypher harmonic chart pattern is an XABCD harmonic pattern which is very similar to the bearish shark harmonic chart pattern. 

How to find bearish cypher harmonic chart pattern?

The first step to draw a bearish cypher harmonic chart pattern is to find the X and A points of the pattern. X and A points of the pattern can be found at the top and bottom of a strong bearish move. 

In  second step, we are going to draw fibonacci retracement levels with fibonacci retracement tool starting from X to A. The B point should be at the 38.2%-61.8% fibonacci retracement of XA. 

We can find the B point without applying fibonacci retracement tool with the following two formulas.

(a) Price at 38.2% of XA = Price at A+(Price at X-Price at A) X 0.382
(b) Price at 61.8% of XA =  Price at A+(Price at X-Price at A) X 0.618

The B point should be found between the price levels found from the above formulas. In the above picture, we can see B point is beyond the aforementioned level. Sometimes similar situations may be found. Traders should accept this point as B, if the other points of the pattern is confirmed.

In  third step, we are to draw the fibonacci retracement levels applying the fibonacci retracement tool starting from A to B. The C point should be within the 113%-141.4% fibonacci retracement of AB. We can find the price levels at 113% and 141.4% fibonacci retracement of AB, applying the following two formulas.

(a) Price at 127% of AB = Price at B-(Price at A+Price at B) X 1.13
(b) Price at 141.4% of AB = Price at B-(Price at A+Price at B) X 1.414

From the above formulas we will find two price levels. C point of the pattern should be at any of the price levels or within the price levels.

So, we already have three points. In our next step, we are going to draw fibonacci retracement levels applying the fibonacci retracement tool, starting from B to C. The D point should be within the 127%-200% fibonacci retracement of BC. We can find the price level at D without applying the fibonacci retracement tool with the following formulas.

(a) Price at 127% of XA = Price at C+(Price at B-Price at C) X 1.27
(b) Price at 200% of XA = Price at C+(Price at B-Price at C) X 2.00

D point of the pattern should be at any of the price levels or within the price levels found from the above formulas.

We already found all of the points to find the bearish cypher harmonic chart pattern. In next step we will reconfirm the D point of the pattern. Traders may ask a question that why the D point should be reconfirmed? The answer is D point should be reconfirmed because it is the entry point to trade this pattern. 

To reconfirm the D point of the pattern we are going to draw the fibonacci retracement levels of XC, applying the fibonacci retracement tool, starting from X to C. The D point should be at the 78.6% fibonacci retracement level of XC. We can find the price level at 78.6% fibonacci retracement level of XC with the following two formulas.

(a) Price at 78.6% of XC = Price at C+(Price at X-Price at C) X 0.786

In above illustration, we can see the D point is little lower than the 78.6% of XC. This is very common because the D point is accurately confirmed by the fourth step. 

How to trade the bearish cypher harmonic chart pattern?

A sell order or short entry is suggested when the D point of the pattern is confirmed. This is the very widely applied technique of trading the bearish cypher harmonic chart pattern.

Some smart traders also trade the C point of the pattern, but I will suggest the new traders to avoid trading the C point of the pattern.

The stop loss for the orders should be placed at the upper fibonacci levels of BC or XC. Other stop loss techniques can also be applied like upper resistance level.

The profit target for the order at point D should be placed at fibonacci retracement levels of CD. Conservative traders generally place profit target at 38.2%, smart traders at 50% and brave traders at 88.6% fibonacci retracement level of CD. 

Dear Traders,If you have any question regarding this post, you can drop it into the comment section below. I generally respond to your comments within 24 hours.

You can also subscribe yourFXguide to receive updates right into your inbox. Simply, enter your email address into the email subscription box and click subscribe, then sign into your inbox and click the confirmation link. Thank you !!!

No comments :

Post a Comment

Drop a comment...