XABCD Harmonics Indicator for NinjaTrader 8

Description

The harmonic methodology utilizes the recognition of specific price patterns and the alignment of Fibonacci ratios to determine highly probable reversal points in the financial markets. This methodology assumes that trading patterns or cycles, like many patterns and cycles in life, repeat themselves. The key is to identify these patterns, and to enter or exit a position based upon a high degree of probability that the same historic price action will occur. Although these patterns are not 100% accurate, these situations have been historically proven. If these set-ups are identified correctly, it's possible to identify significant opportunities with a very limited risk.

Harmonics are 5-point patterns frequently referred to as XABCD patterns. The most well-known harmonic patterns are the Gartley, Bat, Crab, Butterfly, Shark, and Cypher patterns.

Those patterns are defined by swing points generally named X, A, B, C and D. These points define legs on which ratios can be calculated. For example, the AB/XA ratio is calculated by dividing the AB leg retracement by the XA price's initial move. When all of the legs respect a specific ratio rule set, those patterns are recognized.

Examples

These examples were hand-picked to show the best-case scenarios where the indicator detects valid patterns. In real-time trading, the patterns detected won't always lead to a winning trade, and you'll need to make decisions on whether to enter or skip a trade. These examples are all taken on the MES instrument on the 1-minute timeframe.

Gartley Pattern

The indicator allows setting a ratio tolerance in percentage to fine-tune the sensitivity of ratio detection. A higher tolerance value allows a higher number of detected patterns; a lower ratio tolerance results in fewer patterns detected.

The indicator also draws a horizontal ratio spanning the XB leg or the BD leg — this is the Time ratio, calculating the time ratio between the pattern's two halves (from the start point to point X, and from point B to point D). The ideal value of this ratio is 0.5 (50%), meaning the pattern is perfectly symmetrical.

Bat Pattern

For an entry on a Bat pattern, one can wait for a red-candle confirmation after the pattern forms, and target point A or point C.

Crab Pattern

For an entry on a Crab pattern, one can wait for a green-candle confirmation after the pattern forms, and target point A or point C. The indicator can also recognize and print two overlapping patterns sharing the same X, A, B and C swing points but with different D points — a valid occurrence that, in live trading, can be seen as a confirmation signal for the first pattern.

Butterfly Pattern

For an entry on a Butterfly pattern, one can wait for a red-candle confirmation after the pattern forms, and target point A or point C. The Butterfly is the least effective pattern because it ends with price action opposite to the wanted trade direction — be careful with it.

Shark Pattern

For an entry on a bullish Shark pattern, one can wait for a red-candle confirmation after the pattern forms, and target point A or point C.

Cypher Pattern

The Cypher pattern follows the same recognition logic as the other harmonic patterns above.

Parameters

We always try to keep the parameters to a minimum.

Download & Installation Instructions

Installation Steps

1

Import the downloaded .zip file into NinjaTrader using the Import NinjaScript menu item.

2

Open a new chart window.

3

Right-click the chart and choose Indicators... to add the indicator to the chart.

4

Copy/paste your license key, found on the billing page, into the License parameter.

5

After adding the indicator to the chart with a valid license, it will run on the chart's historical data first, then continue running on live market data.

Frequently Asked Questions

General

Release Notes