Recently, people have been asking me about harmonic patterns again, so today I’m going to break this topic down and explain it clearly.

To be honest, harmonic trading does have a bit of a learning curve. But once you’ve mastered it, the accuracy of identifying potential reversal zones can reach 78.7%—that number is real. The top traders I know all rely on this approach for consistent profits, so today I want to walk everyone through the most commonly used harmonic patterns.

Let’s start with the simplest one: the ABCD pattern. This pattern is made up of three waves and four points. The logic is straightforward: push wave AB, then a corrective wave BC, and then another push wave DC in the same direction as AB. The key is that the BC leg must precisely retrace to the 0.618 Fibonacci level, the length of CD must equal AB, and the time cycle should be comparable too. I usually place orders near the potential reversal zone around point C, or wait until the pattern fully plays out and then enter from point D.

The Bat pattern has one more wave than the ABCD pattern, adding an extra X point. If the retracement at point B lines up exactly with 50% of the XA wave, then chances are—eight or nine times out of ten—it’s a Bat. The CD extension should be at least 1.618 times BC, and in some cases it can reach 2.618. Point D will form a potential reversal zone, at which time you can open positions based on whether it’s bullish or bearish.

The Butterfly pattern was discovered by Bryce Gilmore. Its essence is the 0.786 retracement of the XA segment. It helps you pinpoint point B and, from there, identify the potential reversal zone. The Crab pattern is another classic. Its most important feature is the 1.618 extension of the XA wave. In a bullish Crab, the retracement of the AB leg is between 38.2% and 61.8%, and the projection of the BC leg falls in the range of 2.618 to 3.618—this allows you to precisely locate the reversal zone.

The Deep Crab pattern is similar to the regular Crab, except that the retracement at point B must be 0.886 of XA. The Gartley pattern has two iron rules: point B must retrace 0.618 of XA, and point D must retrace 0.786 of XA. This pattern is somewhat similar to the Bat, but the location of point B is more strictly defined. Stop-loss is generally set at X, and take-profit is set at C.

The Shark pattern consists of five waves, with the points labeled O, X, A, B, C. It must satisfy three Fibonacci rules: the AB retracement level is 1.13 to 1.618 of XA; the BC leg is 113% of OX; and the CD target is 50% of the BC retracement. Trading is based on point C, with point D used for take-profit.

There’s also a very rare three-drive pattern that requires perfect symmetry in both price and time. The formation uses five points: the ends of three drive legs plus two retracement endpoints. Drive legs 2 and 3 should be extensions of either 127.2% or 161.8% of the A and C retracements. Retracements are usually 61.8% or 78.6% of the previous leg, but in a strong trend they might be only 38.2% or 50%. Time symmetry is crucial. If the pattern isn’t symmetrical enough or if there’s a price gap, abandon it decisively.

The way to identify harmonic patterns depends on the market direction. The rules for bullish and bearish patterns are the same—only the direction is reversed. If you see a bullish harmonic pattern signal, establish a long position; if you see a bearish signal, short.

If you want to start trading harmonic patterns, I suggest spending time learning the theoretical fundamentals first, deciding whether you prefer a bullish or bearish strategy, and then practicing recognition of these patterns in live trading. The core of harmonic patterns is using Fibonacci ratios and wave structure to forecast market turning points. Once you’ve mastered it, you’ll realize that many opportunities are actually hidden right in the charts. I personally monitor different cryptocurrencies on Gate and often spot plenty of harmonic trading opportunities. Let’s do this together!