Mastering the Cypher Harmonic Pattern: Your Ultimate Guide

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You’ve been tired because of making the wrong decision in the forex market?

Well, we’ve got a treat for you today. In this kickass guide, we’re going to dive into the mysterious world of the Cypher Harmonic Pattern. This pattern can help you to predict market movements accurately.

Buckle up and get ready for some serious trading mojo!

What's the Buzz About Cypher Harmonic Patterns?

Alright, so you’re an advanced trader, and you’ve probably heard about harmonic patterns like the Gartley, Butterfly, and Bat patterns. Well, the Cypher pattern is the new kid on the block, bringing its own unique style to the table. It’s all about finding those sweet retracement zones and riding the wave to profits. Pretty badass, right? The Cypher harmonic pattern is like a boss when it comes to sniffing out possible price turnarounds in the markets. It was discovered by the genius Darren Oglesbee. Think of it as a distant cousin of the butterfly harmonic pattern, but way harder to come across. This pattern is made up of five points: X, A, B, C, and D. These points are linked by four legs, X-A, A-B, B-C, and C-D, with the D point being the big boss where the reversal happens.

How to Spot the Cypher Harmonic Patterns

Now, let’s get down to business and learn how to spot this elusive beast. The Cypher pattern has a distinct structure, and once you get the hang of it, you’ll be like a ninja detecting hidden treasure. To discover this pattern, you must look out for these characteristics:

  • Point B should be within the range of 0.382 to 0.618 Fibonacci retracement levels of the XA leg.
  • Point C should be between 1.272 to 1.414 times the length of the primary XA leg.
  • Point D should break above the 0.786 retracement level of the XC leg.
  • The distance between points X and A should be greater than between points A and B.
  • The angle between the XA and BC legs should be between 127.2 to 141.4 degrees.
  • Point D or the Potential Reversal Zone (PRZ), can move between 0.382 to 0.618.

Bullish and Bearish Cypher Pattern

Just like all those fancy harmonic patterns, we got this thing called the Cypher pattern. Now, this pattern can go either bullish or bearish, depending on the situation. When it’s bullish, it shows up when the market’s been going down for a while, hinting at a possible upward reversal. On the flip side, when it’s bearish, it appears during an uptrend and suggests that things might take a turn downwards.

Alright, let’s break it down. In the Bullish Cypher Pattern, we look for the B point to retrace between 0.382 and 0.618 of the XA leg. Then, the D point needs to break the 0.786 retracement level of the XC leg, but in an upward direction. It’s all about that upward movement, you feel me?

Now, in the Bearish Cypher Pattern, it’s pretty similar. We still want the B point to retrace between 0.382 and 0.618 of the XA leg. But here’s the kicker: the D point needs to break the 0.786 retracement level of the XC leg, but this time in a downward direction. We’re talking about a potential downward reversal, my friend.

So, remember, these Cypher patterns are all about spotting those retracements and breakouts, whether it’s going up or down. Keep an eye out for ’em and see if you can catch those market moves!

How to Trade the Cypher Harmonic Pattern

1. Identify Pattern

Alright, check it out, friends! The first step you gotta take is spotting that pattern. You can use this cool tool called a harmonic pattern indicator in your toolbar to draw those Cypher patterns. Look for the X point on the chart and start tracking the market swing from there. Just make sure all of the legs match up with the characteristics we talked about earlier. Stay sharp and keep an eye out for those key points!

2. Find an Entry Point

When it comes to figuring out when to jump in, you gotta wait for that pattern to give you the green light on a potential reversal, ya dig? Now, for a Bullish Cypher Pattern, here’s what you gotta do. Get ready to place a buy order at the first candle right before the D point finishes up, and that’s gonna be at the 0.786 Fibonacci retracement level of the XC leg. Oh, and here’s an important note: once the market touches that 0.786 level, wave D is considered done, and things might keep movin’ in the same direction, so keep that in mind.

Now, when it comes to a Bearish Cypher Pattern, the game plan is kinda similar. You still wanna place an order, but this time it’s gonna be a sell order. Look for that first candle before the completion of the D point at the 0.786 Fibonacci retracement of the XC leg, and that’s gonna be your entry point. Remember, once the market hits that 0.786 level, wave D is locked in, and you can get in on that sell position.

3. Set Take Profit

When it comes to locking in those gains in a bullish Cypher pattern, here’s what you gotta do. The usual move is to scale out of your position at the first take profit level, and then wrap up the trade at the second take profit level. Now, for a bullish Cypher pattern, that first take profit level is gonna be at point A, which you can find by drawing a Fibonacci retracement of the CD leg. It’s a smart move to snag those profits at point A ’cause it’s a conservative target, and it’s always a good idea to secure those gains as soon as you can, ya feel me? So, keep an eye on point A and get ready to cash in!

4. Set Stop-Loss

Alright, here’s the deal, my friend! When it comes to setting that stop loss in the Cypher harmonic pattern, you gotta follow a little rule of thumb. In the intraday charts, make sure that stop loss is at least ten pips away from the X point. So, if we’re talkin’ about a bullish Cypher, slap that stop loss ten pips below the lowest point of X. And if it’s a bearish pattern, stick that stop loss ten pips above the highest point of X.

Now, here’s the dealio: it’s hella important to remember that your entry point, take profit, and stop loss all need to go through some backtesting. This means you gotta test ’em out and see how they work for ya. Everybody’s trading preferences might be a lil’ different, ya know? But no matter what kind of setup you got goin’ on, you gotta give it a thorough test drive. Don’t skip out on that step!

So, keep those stop losses in check, run some tests, and make sure your trading game is on point, my friend!

The Wrap-Up!

There you have it, my forex amigos! You’re now armed with the knowledge to spot and trade the Cypher Harmonic Pattern like a pro. Remember to stay patient, practice, and test your strategy. The market’s always got surprises, but with the Cypher Harmonic Pattern in your arsenal, you’ll be ready to seize those trading opportunities and make some serious moolah. 

“What? You want to hear more other patterns?”

Don’t worry, we will talk about those in the next articles, ok? So, stay tuned!

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