In this article we present a modified indicator for Metatrader 4 designed to show harmonic price patterns at any price chart and any time frame. This is not an official MT4 indicator.
The harmonic price patterns raise prices geometric formations to the next level through the use of Fibonacci numbers to define precise turning points in the market. Unlike other trading methods used to trade the markets, harmonic trading attempts to predict future price movements.
The harmonic trading can be defined as a trading methodology based on pattern recognition specific price and alignment of relations Fibonacci accurate to find possible levels turnaround high probability in markets This approach assumes that the patterns or cycles markets, as many patterns and cycles in life, tend to recur regularly.
In general, harmonic patterns tend to be quite accurate and reliable. The trader can use with some confidence because they can anticipate changes in price direction that can be used to make profitable trades. Of course they are not completely infallible and as in all methods of analysis and market trading, false signals are also produced, even in the most perfect patterns. However, theyhave the advantage of offering levels of profit taking and stop loss well defined, avoiding speculation. In addition, they present a hazard ratio: Profit pretty good, with a stop loss close to entry level compared to levels where the trader can take profits.
: The following article describes a way to operate with harmonic patterns once they have been identified described strategy to operate with harmonic patterns
However, as all price patterns, the main problem is identification. Many traders do not have the ability to find these formations on their own or do not have the time to analyze charts all day. This is where the ZUP indicator can be useful.
What is ZUP indicator?
It is a custom indicator developed on their own for a trader in 2014 and therefore is not among the official MT4 tools. It is based on the technical indicator ZigZag (find the highs and lows of the pattern) to determine the different movements or oscillations that form the pattern. It also includes relevant Fibonacci relationships vital to find patterns.
Formations you can find this indicator on any instrument and time frame are as follows:
- Gartley pattern
- Bat pattern
- Butterfly pattern
- Pattern 3-Drive
- Crab pattern
- ABCD pattern
- Others
Something interesting about this indicator is that also also traces tridents Andrew in graphics, allowing complement the analysis that can make the trader what happens in the market.
Clarification that we set before continuing to explain this indicator is that repaints , which is due to the use of the ZigZag indicator. This means that the graphic representation completely redrawn based on current data. In the case of ZUP, this can occur with the last component or "leg" of training, not with the above components. Therefore, the trader should be careful in this regard.
Now let's look at two examples:
Example 1: harmonic Butterfly Pattern downward in a graph of GBP / JPY
Figure H4 GBP / JPY a bearish pattern Butterfly
In the above image we see a graph H4 GBP / JPY where the indicator ZUP found a bearish Butterfly pattern drawn with blue lines.
Here we can see what siuiente:
- Once the pattern is completed the display indicates the name of it in the upper left corner, with red letters. In this case indicates Bearish Max. Butterfly .
- The lines that make up the pattern are indicated by blue lines.
- By a red square figure , the indicator displays where the pattern and the area where the position can be opened in this case sale is completed. This figure also can be used to determine where we will place the stop loss if the pattern is invalid.
Example 2: Shark Bajista harmonic pattern in a graph of GBP / AUD
Figure H4 GBP / AUD a bearish pattern Shark
We now have a picture with a bear Shark pattern detected by the ZUP indicator in H4 chart of the GBP / AUD. As in the previous case, the indicator clearly indicates the name of the detected pattern, trace clearly using blue lines and highlights the area where the training is completed and can open the position in this case of sale.
Gauge Setup
This indicator takes some getting used to. This is because there are many configurable parameters involved and the trader can even apply ZUP indicator to validate some other complex methods that also rely on Fibonacci.
For the novice trader can be confusing at first, but in this case my recommendation is to leave the settings as they are without any modification, unless they know what they are doing.
Modifiable parameters indicator ZUP
The above picture shows the ZUP indicator for MT4 and adjustable parameters presented. As you can see, there are several settings that allow completely customize the custom indicator. For example, you can use the ZUP indicator to define the Fibonacci ratios so that the indicator specifically look for these patterns.
If you are still interested in changing parameters in the download file I include a description of the parameters used in the version 1.52 of this indicator (is paid, so I did not include it in this article) in English. Although these are different versions, version 1.50 we describe in this article uses the same indicators and basic parameters.