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First of all, I have to say that I use harmonic patterns in every analysis and trade I make, hence, the following discussion is something that I firmly believe in. Now, what are harmonic patterns? They are a combination of simple and complex formations of certain ratios and their reciprocals through candlesticks or bars that might indicate a reversal or at the very least a correction zone at certain levels.

As with any other type of analysis, it is better to use them in conjunction with other methods and indicators. But before we start learning how to trade them, let’s get to know the Fibonacci sequence. The sequence follows this distinct pattern.

It is not really important how we got to trading from these patterns, therefore we will discuss the ratios from a financial trading perspective. After mastering the Fibonacci technique, we will proceed to using them with harmonic price patterns. Our job here is to know until which level do prices have to fall before the trend resumes.

I know that these are a lot to take, but you’re not actually supposed to memorize them, as in any trading software, you can program them to be visible when you are using the Fibonacci retracements and by time you will get to be familiar with all of them. Although, extreme accuracy does not exist in finance and trading, we should however try to approach it with any means we have and that in turn requires us to use candlesticks in order to retrace the upswing from its real bottom (i.e. the low of the first candle in the upswing) until the highest point of the suspected end of the wave (upswing). While we are talking about waves, we can take the chance and discuss Elliot wave theory.

A long time ago an accountant called Ralph Nelson Elliot came up with the theory that prices move in wave patterns composed of impulse and correction waves. Fibonacci retracements and expansion help determine these waves and give insight into the direction of the price. Although Elliot waves are not used as trading signals per se, they are nevertheless useful in determining where prices are going, for further details, the reader is encouraged to read-up on Chaos theory and Elliot wave trading.

It should be clear that the Fibonacci reciprocal is simply 1 / X of the Fibonacci retracement. Many harmonic patterns exist and they differ in complexity and profitability but we will be discussing the simplest and the best one, the ABCD pattern. What is an ABCD pattern? It refers to three legs defined by two impulse waves and one correction wave between them before the last corrective wave is forecasted. The optimal target for an ABCD pattern is 38.2% of the whole length of the pattern.

Forex trading is probably one of the most profitable sides hustles you can grab today. In fact, if it wasn’t so profitable we wouldn’t be having more than $5 trillion daily traded value. But that’s beside the point. I’m pretty sure you want to find out how much you can expect from about a week or a month of trading Forex.

Well, it’s not that easy to answer the question so let me bring in a story for you.

Meet Nathan. Nathan is a father of two and has a stable job as an accountant in New York. He’s relatively successful and is able to bring in about $100,000 a year as income for his family.