This indicator is a comprehensive pattern indicator and it comes in use for both short term and long term traders.
The harmonic indicator is optimized for the MT4 trading platform. It is a multi-timeframe indicator; which means it can be used on any timeframe starting from one minute to one month. This is what actually makes it a valuable tool for any type of trader. A scalper using the tightest timeframes of maybe one minute and 5 minutes would perfectly use this indicator to identify trends. Similarly, a day trader using one hour, four hours and one-day timeframes would also perfectly use this indicator to identify perfect trading opportunities. Moreover, a long-term trader using timeframes above D1 would also be in a position to use the indicator to trade.
If we compare between harmonic and basic chart patterns is that, for each of them, the similarity is the shape and structure are key factors to recognizing and validating a specific pattern. The next movement can surely be projected with the goal of turning these patterns into profits. However, a key difference is that harmonic patterns are defined more accurately. They are 5-point reversal structures, containing combinations of well defined consecutive Fibonacci retracements and Fibonacci extensions, leaving less room for flexible interpretation.
Harmonic patterns consecutively repeat themselves, especially in consolidating markets. There are basically 2 types of patterns. Trading harmonic patterns require patience as patterns that appear harmonic may not be if they don’t align with the proper measurements.
How Do You Use A Harmonic Pattern Indicator?
First, click on the harmonic pattern indicator which can be located on the right-hand side toolbar of the Trading View platform. In the terminal, you can locate the harmonic pattern indicator in the Indicators library. Point out on the chart the starting point which X, which can be any swing high or low point on the chart. However, if you are a long term trader, you would place the sell at the level indicated in the summary text at the right-hand corner and also set the take profit and stop loss levels accordingly.
The same case applies; if you are a long term trader, you should confirm the trend of the higher timeframes. You will be more secure if the trend of the higher timeframes is in the same direction. For the day traders, they should confirm that the trends of the lower timeframes are equivalent so as to place the order.