FIBONACCI PATH HARMONIC PATTERN ANALYZER

in-depth view for forex tool #13
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This tool is one of two specials in the harmonic tools, it aims to find Fibonacci harmony in any given 5-points move.

It scans the path with respect to 111 Fibonacci levels representing 14 Fibonacci relations (8 common, 6 exotic), pinpointing the nearest relation for each point through that path and allowing to save the Fibonacci Path in common harmonic pattern's structure.

There are 2 calculation algorithms to determine the nearest match, and strength of relation is assigned to all Fibonacci relations at each point through the path. This helps study the path with ease and freely decide the final path to be saved.

The tool is able to save patterns with detailed data, and reload a saved pattern. It doesn't have the functionality of sending a trade setup to "Custom Trade" tool since it is not intended to be a trading tool on its own, its main goal is to study a price path from harmonic perspective.

The pattern used to demonstrate the tool is a 2618 pattern that started forming in the H1 chart for EUR/NZD on 19-Apr-2016 13:00, the same pattern used to demonsrate the "Custom Harmonic" tool.
The sections in this page will cover the analyzed Fibonacci relations and levels that are scanned by the tool, tool's data flow within the toolkit, the 2 algoirthms available, rates' path input method, in-depth demonstration for the pattern progression, and saving a pattern.

ANALYZED FIBONACCI RELATIONS AND LEVELS

POINT B

Analyzed against 16 Fibonacci levels respresenting 2 Fibonacci relations (1 common, 1 exotic).

XA retracement - from A
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci retracement level 61.8% is used to illustrate the relation (this level is used in Gartley, Crab and Cypher patterns)

Point B illustration: XA retracement - from A

point B illustration: XA retracement - from A

XA projection - from A
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci projection level 224.2% is used to illustrate the relation

Point B illustration: XA projection - from A

point B illustration: XA projection - from A

POINT C

Analyzed against 48 Fibonacci levels respresenting 6 Fibonacci relations (2 common, 4 exotic).

AB retracement - from B
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci retracement level 50.0% is used to illustrate the relation (this level is used in all harmonic patterns, except Cypher)

Point C illustration: AB retracement - from B

point C illustration: AB retracement - from B

XA extension - from X
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci extension level 127.2% is used to illustrate the relation (this level is used in Cypher pattern)

Point C illustration: XA extension - from X

point C illustration: XA extension - from X

XA retracement - from X
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Inverted for initiating swing, normal for completing swing

Fibonacci retracement level 78.6% is used to illustrate the relation

Point C illustration: XA retracement - from X

point C illustration: XA retracement - from X

AB projection - from B
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci projection level 161.8% is used to illustrate the relation

Point C illustration: AB projection - from B

point C illustration: AB projection - from B

XA retracement - from A
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for initiating swing, inverted for completing swing

Fibonacci retracement level 61.8% is used to illustrate the relation

Point C illustration: XA retracement - from A

point C illustration: XA retracement - from A

XA extension - from A
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Inverted for both initiating and completing swings

Fibonacci extension level 161.8% is used to illustrate the relation

Point C illustration: XA extension - from A

point C illustration: XA extension - from A

POINT D (PRZ)

Analyzed against 47 Fibonacci levels respresenting 6 Fibonacci relations (5 common, 1 exotic).

XA retracement - from A
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci retracement level 88.6% is used to illustrate the relation (this level is used in Bat pattern)

Point D (PRZ) illustration: XA retracement - from A

point D (PRZ) illustration: XA retracement - from A

XA extension - from A
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Inverted for initiating swing, normal for completing swing

Fibonacci extension level 161.8% is used to illustrate the relation (this level is used in Crab and Deep Crab patterns)

Point D (PRZ) illustration: XA extension - from A

point D (PRZ) illustration: XA extension - from A

BC projection - from C
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

9

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci projection level 200.0% is used to illustrate the relation (this level is used in AB=CD, Butterfly, Bat, and Deep Crab patterns)

Point D (PRZ) illustration: BC projection - from C

point D (PRZ) illustration: BC projection - from C

AB=CD
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

8

RELATION DIRECTION

Normal for both initiating and completing swings

Alternate 161.8% AB=CD is used to illustrate the relation (this AB=CD variant is used in Butterfly, Bat, and Deep Crab patterns)

Point D (PRZ) illustration: AB=CD

point D (PRZ) illustration: AB=CD

XC retracement - from C
RELATION TYPE

Common

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci retracement level 78.6% is used to illustrate the relation (this level is used in Cypher pattern)

Point D (PRZ) illustration: XC retracement - from C

point D (PRZ) illustration: XC retracement - from C

BC retracement - from C
RELATION TYPE

Exotic

ANALYZED FIBONACCI LEVELS

7

RELATION DIRECTION

Normal for both initiating and completing swings

Fibonacci retracement level 78.6% is used to illustrate the relation

Point D (PRZ) illustration: BC retracement - from C

point D (PRZ) illustration: BC retracement - from C

TOOL'S DATA FLOW

The below illustration details the type of data flow between this tool and other directly connected tools, to see the bigger picture for the whole toolkit's data flow please check this illustration.

Detailed data flow from/to "Fibonacci Path" tool

detailed data flow from/to "Fibonacci Path" tool

A scanned Fibonacci path (pattern) can be directly saved to history once the pattern reach proactive status for its final point(PRZ).

This tool doesn't have "take trade" functionality like most of the other tools since it is not intended to be a trading tool on its own, its main goal is to study a price path from harmonic perspective.

Any saved path can be reloaded from "Harmonic Patterns" history tool back into this tool.

THE 2 CALCULATION ALGORITHMS

"Fibonacci Path" tool - 2 calculation algorithms

fibonacci path tool calculation algorithms

Retracement/Extension/Projection percentage

This is the default algorithm used by the tool, it determines which Fibonacci relation and level are the nearest to a point(rate) by using the difference in percentage between the near Fibonacci relations and the actual retracement/extension/projection created by the analyzed point. For example, consider a point being compared against two relations, the first relation is an extension and the point's actual measurement with respect to that relation was 158.0%, the deviation in this case will be calculated with respect to the nearest extension as ( 161.8% - 158.0% = 3.8% ), while the second relation is a retracement and the point's actual measurement with respect to that relation was 86.0%, the deviation in this case will be calculated with respect to the nearest retracement as ( 88.6% - 86.0% = 2.6% ). Out of those two relations, the retracement will have higher strength over the extension since its deviation is only 2.6% compared to 3.8% for the extension. Even if the pip distance between the actual rate and the rate representing the 88.6% retracement is longer than that of the extension.

Pip distance

This setting determines which Fibonacci relation and level are the nearest to a point(rate) by using the difference in pip distance between the actual rate of the analyzed point and the rate of the near Fibonacci levels. A Fibonacci relation resulting in a smaller pip distance will always be chosen even if the deviation percentage for it's nearest level is higher than another near level of another relation.

TOOL'S INPUT METHOD

Swing rates that define a path for the pattern are entered manually, a method that might not appeal to many forex traders who want a ready to trade pattern. However, the advantages gained by using this method of rates input can't be acquired using any different way.

The ability to validate all harmonic patterns simultaneously using a single path, getting proactive possible rates for the next point(or PRZ), knowing the exact precision of each point, the ability to test expected rates to see if the pattern is worth keeping an eye on. Those are a few advantages gained as a result of using that input method.

PATH TO VALIDATE

"Fibonacci Path" tool input

tool's input

This is where the rates for the path is entered to be validated against the Custom Harmonic pattern conditions, below is an explanation for the 3 inputs controlling the path.

The inputs for this section affects all the 10 harmonic tools, the pattern watch window will be updated with all the harmonic tools status whenever a change in path occurs.
CURRENCY PRESET

This choice will determine the pip's decimal and fractional decimal to be used for calculations. Can be chosen from any of the 6 custom currency presets. Although we are trading EUR/NZD, the currency preset selected is EUR/USD as both pairs have the same characteristics.

DEVIATION SETUP

This setting sets the "quality" of the pattern by limiting a point to be marked valid only if its deviation is less than or equal the defined deviation value, which can be set to any number between 0.250% to 4.750%. Deviation is applied smartly to each point with respect to the swing originating the Fibonacci relation.

PATH SETUP

The 5-points path (rates) creating the pattern are entered here sequentially.

TOOL PROGRESSION IN-DEPTH

Now that both the general flow of the tool and path input method are explained, we can go in-depth explaining how exactly the tool analyze the path as rates are being entered.

POINT B

"Fibonacci Path" tool progression at point B

fibonacci path tool progression at point B

"Fibonacci Path" tool progression at point B chart

chart at point B

When rates for points (X, A and B) are entered, the tool will be in "Active" status and point B will be analyzed against all the 16 levels representing the 2 Fibonacci relations illustrated earlier. There are only two relation strengths for this point, the higher strength relation will automatically be chosen when saving the path as a pattern.

POINT C

"Fibonacci Path" tool progression at point C

fibonacci path tool progression at point C

"Fibonacci Path" tool progression at point C chart

chart at point C

When (X, A , B and C) rates are entered, point C will be analyzed against all the 48 levels representing the 6 Fibonacci relations illustrated earlier. There are 4 relation strengths for this point, where the strongest 3 relations will be available to choose from when saving the path as a pattern.

Relations that doesn't make sense are automatically ruled out and strength of relation is applied to the remaining logical relations.

In our example, both (XA retracement - from A, and XA extension - from A) are ruled out because point C is beyond point A, and the remaining 4 relations were assigned their strengths according to the calculation algorithm chosen.

POINT D (PRZ)

"Fibonacci Path" tool progression at point/PRZ D

fibonacci path tool progression at point/PRZ D

"Fibonacci Path" tool progression at point/PRZ D chart

chart at D/PRZ

When (X, A, B, C and D) rates are entered, point D will be analyzed against all the 47 levels representing the 6 Fibonacci relations illustrated earlier. There are 4 relation strengths for this PRZ, where the strongest 3 relations will all be saved when saving the path as a pattern, giving the option to determine which one of them will be saved as the critical relation.

Just like point C, relations that doesn't make sense are automatically ruled out and strength of relation is applied to the remaining logical relations.

In our example, only (XA extension - from A) is ruled out because point D didn't go beyond point X, and the remaining 5 relations were assigned their strengths according to the calculation algorithm chosen.

SAVING A FIBONACCI PATH

Saving a path is enabled when all the points (X, A, B, C and D) are entered. A path will be saved in the common harmonic format, with a single relation for each of B and C points, and 3 relations for D (PRZ) including the critical relation.

Since this isn't a trading tool, there are no targets or stop-loss levels saved with the pattern.

The pattern's final path can be refined before saving. Below is the final path generated by the tool for the 2618 pattern and an explanation of how to choose which Fibonacci relations to be saved.

"Fibonacci Path" tool - saving options

fibonacci path tool saving options

POINT B

This point will automatically save the strongest calculated relation of the 2 Fibonacci relations analyzed.

POINT C

For this point, the top 3 strongest calculated relations are provided to choose a single one to be saved with the pattern.

POINT D (PRZ)

For this point, all of the top 3 strongest calculated relations will be saved. With the option to choose which relation is the critical relation, while the remaining 2 will be saved as complementary relations.

"Fibonacci Path" tool - saving a pattern

fibonacci path tool - saving a pattern

TRACKING DETAILS
PAIR

Currency pair of the pattern & the chart time frame

DATE

Day of pattern initiation

X

Timestamp of the candle respresenting point X

OUPUT

Since this isn't a trading tool, the pattern is always saved with output (NA)

THE SAVED PATH IN HISTORY TOOL

Click the image above to see a native resolution screenshot for "Harmonic Patterns" history tool, showing the Fibonacci Path used for demonstrating the tool after saving.