Cypher Pattern: How to

Here's a guide on how to use the Cypher Pattern in Trading

 Understanding the Cypher Pattern

 Harmonic Pattern 

• It's a type of pattern that relies on specific Fibonacci ratios to identify potential reversal points in the market. 

Structure

• It consists of 5 points (XABCD) that create four distinct price swings.

Reversal Signal

• It indicates a potential trend reversal, either from bullish to bearish or vice versa. 

Key Fibonacci Ratios

• AB retraces XA by 38.2% to 61.8%
• BC extends XA by 127.2% to 141.4% 
• CD retraces XC by 78.6% 

Steps to Use It

 Identify Potential Patterns

• Look for price swings that resemble the zigzag or lightning bolt shape of the Cypher. 

Apply Fibonacci Tools

• Use Fibonacci retracements and extensions to measure the ratios between the points and confirm if they align with the pattern's requirements. 

Confirm with Other Indicators

• Use additional technical indicators (RSI, MACD, stochastics) to reinforce the reversal signal. 

Enter the Trade

Limit Order

• Place an order at the 78.6% retracement level of XC (Point D). 

Market Order

• Enter after confirmation of price reversal. 

Set Stop-Loss

• Place stop-loss below X (for bullish patterns) or above X (for bearish patterns). 

Take Profit

• Potential Targets: B, A, or C levels 

Fibonacci Extension Levels

• Consider additional targets based on Fibonacci extensions.

 Important Considerations

 Rarity

• Cypher patterns are relatively rare, so patience is crucial. 

Subjectivity

• Pattern identification can be subjective, so practice is essential. 

Risk Management

• Always use stop-losses and manage risk appropriately.  

Confirmation

• Seek confirmation from other indicators before entering trades. 

Harmonic Pattern Indicator

• Trading platforms often have built-in tools to help identify harmonic patterns

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This pattern has a good winning percentage on Bitcoin but they seldom appear.