Harmonic Patterns — what it is and how to use it in trading
Definition
Harmonic patterns are a family of chart figures (Gartley, Bat, Butterfly, Crab, Shark, Cypher, Three Drives) where the distances between a move's reference points match classic Fibonacci ratios. All of them complete at a reversal point (usually called D), from which a move in the opposite direction is expected.
How it works in the builder
In the Trading Way builder each pattern is a separate boolean operand (gartley_bullish, bat_bullish, and so on) sharing left/right parameters (confirming the intermediate swings) and a tolerance parameter (the allowed deviation from the reference ratios, typically 0.08 = +-8%). All patterns are recognized mechanically from fixed formulas — no subjective hand markup.
What it looks like on the chart
On the chart all seven figures are drawn with five (Gartley/Bat/Butterfly/Crab/Shark/Cypher) or six (Three Drives) connected move points — the difference is how far the final leg travels relative to the earlier ones: from a retracement back inside the range (Gartley, Bat) to an extension far beyond it (Butterfly, Crab).
Typical use
All seven patterns are used the same way: point D is a potential entry zone against the direction of the last leg, usually with an extra confirmation (an oscillator divergence, a candlestick pattern, a Smart Money zone). The difference between them is the set of Fibonacci ratios and, as a result, the shape and depth of point D.
Common pitfalls
Harmonic patterns have historically been marked up by traders by hand and are largely subjective as a result; the builder's mechanical recognition removes that subjectivity, but in exchange only accepts figures that precisely fit the given tolerance — a trade-off between how many signals are found and how strictly they match the canonical shape.
This block is available in the strategy builder
137 no-code blocks — build an entry condition with this term and test it on history
Historical results do not guarantee future ones. The service is an informational and analytical tool, not an individual investment recommendation; trades are not executed.