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Thread: Confirming Harmonic patterns with Divergence

  1. #1
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    Confirming Harmonic patterns with Divergence

    I am current backtesting methods of confirming harmonic patterns. Its a known fact that most harmonic patterns dont work out in the long run. You will see them create short pip movements that normally dont go beyond 100 pips. But for those that work, (2 out of 10) they can start really long trends. And these usually are backed by some sort of divergence from an oscillator. I am using the oscillator Adaptive Cyber Cycle Divergence invented by John Ehlers and described in chapter 10 of his book "Cybernetic Analysis for Stocks and Futures: Cutting-Edge DSP Technology To Improve Your Trading" it uses very complex algorithms. and I bought it for a hefty price from BJF Trading group. My harmonic indicator choice is ZUP V.83. I know korHarmonics is also good, but its kind of limiting, if they dont give a new version, you wount use it. So you are relying on something that depends on someone else is not a good way to run your trading career.

    I am backtesting my strategy signals with atleast 20 year historical data. I am using a trading simulator. It loads the charts from the historical data and loads the bars one by one as if it was real trading. And you can choose the speed at which you want the bars to load, so you can trade even on weekends. Its probable the best simulator up to now.

    I have started today. When I get the ideal Harmonic pattern confirmed with a divergence during my simulations I shall post the setup here including how I traded it. So we can all once and for all find the best stratergy to trade harmonic patterns. Instead of relying with expert who write expensive harmonic books with good ideas but without clear objective methods of how to enter, manage and exit a position using the Harmonics.

    My tools will be:
    1. ZUP v83 and/or Search Patterns V6 or manually draw the patterns (choice is yours).
    2. Adaptive cyber cycle divergence indicator. (from BJF Trading group)
    3. LFH Trading simulator. (its an EA that loads historic data bars one by one like it was forming in real time) It also allows you to buy and sell. Whatever stratergy you are developing, USE THIS EA AND YOU WILL NEVER REGRET IT.



    We are no experts, we help each other.

  2. #2
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    The Indicators

    The indicators I use. Find the attachments.
    Attached Files Attached Files

  3. #3
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    A few charts to start off

    Here find some charts of the current markets positions
    Attached Thumbnails Attached Thumbnails Confirming Harmonic patterns with Divergence-audchf-h1.jpg   Confirming Harmonic patterns with Divergence-eurgbp-h1.jpg   Confirming Harmonic patterns with Divergence-eurusd-h4.jpg   Confirming Harmonic patterns with Divergence-gbpaud-h1.jpg   Confirming Harmonic patterns with Divergence-gbpusd-h1.jpg  

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  4. #4
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    Audchf 1 hour

    The pair is showing a bullish butterfly supported by a divergence from Adaptive cyber cycle indicator. The moving averages (SMA 8 & SMA 13) have made a cross confirming the 61.8% retracement of point 'C' as I mark on chart. I have put my SL at 61.8% Ret, I am lanning to trail the position manually using the SAR. My exit is when the market reverses and hit my SL.

    Confirming Harmonic patterns with Divergence-audchf-h1.png
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  5. #5
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    Gbpaud 1 hour

    The pair is showing a bearish butterfly on 1hr chart Supported with Divergence from Adaptive Cycle and confirmed with SMA 8 & 13. I made a short entry at 1.47242. I have trailed with SAR and currently at 1.47685.

    (was unable to put picture here so I make attachment instead )
    Attached Thumbnails Attached Thumbnails Confirming Harmonic patterns with Divergence-gbpaud-1-hour.png  
    Last edited by jaguar; 02-20-2012 at 11:20 AM.
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  6. #6
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    Great initiative mate, thanks. I will be monitoring your progress and i hope others will follow/support.
    note that we describe the confirmation techniques here: -> Gartley pattern - table of content
    so if you have an idea for another confirmation technique, lets check how we can make a short video about it.
    Last edited by kor4x; 02-20-2012 at 03:51 PM.

  7. #7
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    where can i find Adaptive cyber cycle divergence indicator from ? can you please attach it here... or provide url from where i can download this indicator ?

    thanks.

  8. #8
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    I clicked the link and got "500 Internal Error"

    As soon as I have some consistency maybe we can make a video to help other traders.

    Thanks.
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  9. #9
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    I bought it from BJF Trading group.
    I am not sure if I am allowed to share it. I shall Send them email now and will tell you results.
    Find its description from here John Ehlers AdaptiveCyberCycle Divergence Indicator
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  10. #10
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    Audchf 1hr update

    Unfortunately, The AUDCHF Setup has Failed. I have been stopped out at 0.98027. It seems the retracement wasnt over yet.

    Possible mistake I made is putting a tight stop loss of 54pips.
    This is the first fake signal from my system.

    Soldiering forward!
    Attached Thumbnails Attached Thumbnails Confirming Harmonic patterns with Divergence-failed-audchf-butterfly.png  
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