Pattern 5-0

Alpari

Pattern 5-0 — Another Harmonic model, which we will use the forex market (remember that we recently saw forex strategy «butterfly effect», based also on the harmonic model — Butterfly), this «5-0«, meets on all currency pairs and can be used for closing the transaction at any time interval.

Pattern 5-0 is exactly the same as all the harmonic model for selling and buying.

Let us consider the classical version of the 5-0 for sale. It looks like this:

Pattern 5-0 from Buy

1. On the chart, we notice that the price originally directed downward from the point 0 to point X (where the point 0, shall be located above the point A)

2. Further, the price makes a corrective move from point X to point A

3. point B in this case is directed in the same way as the original trend of OX, and the point B is located at a distance from 1.13 to 1.618 on the length of XA

If this ratio does not match, then about any possibility of forming a 5-0 lead on it was not worth it!

4. Then we expect the formation of point C, which should be within 1.618 — 2.24 of the segment AB

5. Once formed the point C and the price went down, we construct a parallel channel by 3 points: the AU and hold a parallel line through point B.

Pattern 5-0

6. At the same time about this 2 nd parallel to the line and we will have is a point at which we will enter into a deal to buy, and it will be located at a distance of 50% Fibonacci segment BC!

So it should be noted that AB = (or approximately equal) CD

7. Once we have determined the entry point to set aside an order to Buy — Buy Limit your selected volume, according to the rules of Money Management in Forex!

8. The next step — to set the stop-loss him, I personally recommend setting for the next important level for the Fibonacci sequence, in this case on several points nizhu level of 61,8% on the Fibonacci sequence. How many points, you decide — it depends on the chosen time interval and tradable instrument (ie the currency pair) in which you trade, the M5-M15 it could be 5-10 points.

9. Next we define the goal of take-profit. Here it is up to you … a lot of variants:

- You can find important Fibonacci levels from trend downward movement to point B and put the profit levels 38.2%, 61.8% Fibonacci

- You can close part of the deal at the census point C, while the rest move to breakeven or to put on a trailing stop

- You can calculate the point of closing the deal on the Fibonacci extension — at a distance of 1.382 — 1.618 — 2.618 of the segment BC

- Well, or your version of …

For transactions to sell at 5-0 — opposite conditions:

Pattern 5-0 on sell

I repeat: It’s you and I consider an ideal option 5-0, which is subject to any rules of construction, gives a fairly good momentum of motion (hence we have a great chance to close the deal at a profit) and, as you know, is a combination of a reversal in the market Forex.

Pattern 5 0 sell

BUT, there are 5-0 that do not meet all Fibonacci ratios, due to modifications of the segment BC (it could be greater or less than AB x (1.618-2.24)), while point D is located at the 38,2% Fibonacci, or 61.8% Fibonacci. But the equality of the segments AB and CD also must be met and at the same point D is still located on a line parallel to the channel!

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