# Review of Step Nine Forex Lesson

The Forex traders and investors always look for the successful patterns of trading and Harmonic Pattern is a successful pattern of trade. These patterns have been successful in 70% or more predictions. So many traders and investors prefer to use these patterns to identify the price reversals. There is minimum use of guesswork in these patterns because the pattern depends on the fixed Fibonacci numbers. With these patterns, the traders can determine the reversal points having high probability. So it is advisable to buy or sell securities when the repetition of any historic price action having high probability is predicted. Harmonic Patterns are suitable for any time frame daily, weekly, monthly or annually and also intraday. These patterns are good for trading but should not be used without other methods. The AB=CD Pattern, Gartley Pattern, Bat Pattern and the Butterfly Pattern are the types of Harmonic Patterns. Fxstay broker provide you the list of harmonic pattern to learn, check out below:

AB=CD Pattern

Larry Pesavento introduced this Harmonic Pattern to predict the potential pattern. This pattern is also known by the name of the “Lightening Bolt”. In this pattern, a rally is followed by the Retracement and when again a rally occurs after the Retracement it forms a parallel channel. This pattern is called the AB=CD pattern. Remember, not all such rallies followed by the Retracement forms the AB=CD pattern. So to correctly analyze the AB=CD Pattern, the traders and investors must know the rules of a valid AB=CD Pattern. In a valid AB=CD Pattern, Retracement cannot be more than 1 and if it exactly then it is a valid AB=CD Pattern but rarely observed on the Forex Trading charts. D should exceed B for a valid AB=CD Pattern to complete.

Gartley Pattern

This pattern is known to be the most common Harmonic Pattern among the Harmonic Patterns. If the traders and investors are able to spot this pattern correctly then they can earn huge profit in the Forex market. This pattern is used to determine the trading signals. Specific Fibonacci points are used in this pattern to determine the valid trading opportunities. 78% Fibonacci Retracement level is the reliable Retracement level in this pattern. This pattern uses the two corrective waves that are formed with in the boundary of the former impulsive wave. These two waves are same in price and time. Long trade positions should be entered in this pattern when the low level of the mid point is crossed because at this cross a signal of strong momentum is possible on the upside. Stop loss in these positions should be placed below than the lower level of the Pivot Point.

Butterfly Pattern

The pattern that indicates a strong reversal and follows a strong reversal after the pattern is finished. This pattern is named Butterfly Pattern because the shape of the pattern is like a butterfly. This pattern is about 75% accurate and gives better results than the Gartley Pattern. Spotting on the chart is easier in this pattern and so the traders and investors find this pattern easier. Traders must confirm this pattern before they start trading using this pattern. Confirmation can be done by checking the last side and the first side because if the last side extends the first side then the pattern is valid otherwise the pattern is invalid.

Bat Pattern

Bat Pattern is the Retracement Pattern. This pattern is an extended form of the previous Gartley Pattern. This pattern is named Bat Pattern because this pattern when drawn on the chart appears to look like a bat. Bat Pattern was introduced by Scott Caney in the year 2001. This pattern is considered as a powerful pattern by the Traders and investors because easy entry and exit price of currencies can be derived using this pattern. Strong Resistance and Support levels can also be known from this pattern. This pattern works on any time frame such as hourly, daily, weekly and monthly. This pattern can be used for any trading style such as swing, positional or intraday. This pattern has high accuracy and need small stop loss.