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Chapter 17, Part III - Gartley's Patterns. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: The major idea of trading is the same – create double position with risk no more than 2% of total assets. Close the first half with profit equal to stop-loss value, close the second half at some other level as it shown at chart #2:

    Chart #2 | 60-min EUR/USD and targets of Gartley’s “222” pattern

    Let’s assume that we’ve placed stop based on harmonic swing – 40 pips above completion of AB-CD retracement. Our first exit will be at 1.4290 – and profit is equal to potential loss. Then we move our stop loss to breakeven and turn the second half into a riskless trade. As you can see from the picture, there are a lot of potential targets where you can take a profit. Which one you will choose depends on your experience and market action. Most probably that we will take rest of profit at 0.618 or 0.786 level. Still, we have another couple of targets. First one is 0.618 extension of greater ABC Fib extension pattern, where AB is our initial XA swing, BC is total AB-CD retracement and CD is continuation of “222” pattern. Also you can see that market is forming a greater AB=CD pattern and it’s rather harmonic, so you can wait the target at D-point around 1.4030 area. AB=CD retracement of “222” pattern is a BC leg of this large AB=CD.

    We do not tell about that, but in general, harmonic patterns also are some kind of fractals. They are just another view on the structure of the market that is used in EW theory. The major difference is that harmonic patterns are treated as a separate, self-sufficient tool for trading, while EW theory tries to link them into waves.
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