Sunday 5 May 2013

Week-End Thoughts: Higher Degree Harmonic Patterns

Four arms of a Harmonic Pattern are usually labelled as
XA
AB
BC
CD

In patterns like Gartley,Bat,Butterfly and Crab BC= max. 0.886*AB

And it is only in SHARK pattern that BC=min.1.13*AB to 1.618*AB




Thus one can infer that if BC gets more than 0.886*AB then it would do minimum 1.13*AB and can extend upto 1.618*AB.

Now applying this principle to higher degree Nifty for its upmove from 2252(October 2008) following picture emerges:
XA=2252-6339=4087
AB=6339-4531=1808
BC=4531-6112*=1581(0.875*AB so far)
And as mentioned above, important threshold for this BC is 0.886*AB=6132
If this threshold gets breached,we would be gunning for
BC=1.13*AB=6574
So as per Harmonics, it is not the breach of 6112 but 6132 which is important for a 'structural change" in Nifty price-pattern at higher degree.

And I would also highlight the 6339-6112 trendline as important resistance point:

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