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<p><br>Trading on the patterns requires touching the implied reversal zone, also referred to as Potential Reversal Zone — PRZ. A basic tule of thumb that we can follow when trading is to place two targets with the first one being at 38.2% of the top to bottom (or bottom to top) retracement and the second one being at 61.8%. The stop will be placed at half the distance between the entry and the second target thus ensuring a 2.0 risk reward ratio. I generally take half the profits at the first target and move the stop to breakeven, that way …</p>
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<p id="isPasted">I have found this pattern after searching for extended moves that occur after extreme reversals. The pattern is fairly easy and comes from the ABCD family. The ABCD is simply a symmetrical configuration where the AB leg equals the CD leg. The Arrow harmonic pattern is when the CD leg equals 2.24x of the AB leg and thus it captures distant reversals.</p><p>The Arrow pattern is an interesting configuration that takes advantage of extended moves to detect an imminent reversal level. It is defined as:</p><p>An impulsive move followed by a reaction with no preferable retracement level.</p><p>An extended move …</p>
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