Trading with technical analysis demands traders to depend mostly on a mixture of technical indicators and trade based on the signals from this approach. Apart from using technical indicators, traders also utilize chart patterns to base their trading decisions, whether to sell or buy. In this article, we’ll deep dive into the Three Drives harmonic pattern.

Harmonic trading is an advanced area. Even though it is more difficult than regular technical elements, can show great trading opportunities. Harmonic trading uses structural analysis, Fibonacci ratios, and symmetry. It allows them to describe patterns in the market which tend to yield significant outcomes.

Although chart patterns are more qualitative than other indicators, they can provide great insights into the psychology of the market at any given period, making them necessary tools for traders.

Harmonic price patterns enable us to distinguish possible areas for a continuation of the overall trend.

Six Harmonic Price Patterns

There are six harmonic price patterns:

  1. The ABCD Pattern
  2. The Three-Drive Pattern
  3. The Gartley Pattern
  4. The Crab Pattern
  5. The Bat Pattern
  6. The Butterfly Pattern

3-Step Price Pattern Recognition Process

The three basic steps in spotting harmonic price patterns are the following

  • Step 1: Locate a potential harmonic price pattern
  • Step 2: Measure the potential harmonic price pattern
  • Step 3: Buy or sell on the completion of the harmonic price pattern

Again, harmonic price patterns are so perfect that they are very difficult to spot.

More than knowing the steps, you need to have hawk-like eyes to spot potential harmonic price patterns and a lot of patience to avoid jumping the gun and entering before the pattern is completed.

With enough practice and experience, trading using harmonic price patterns can yield a lot of pips!