Harmonic shark strategy

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The shark pattern anatomy can be found online, I won't be going much into that. If you are interested in learning how to spot these patterns yourself, make sure to look for it.

With this post I will be looking at the issue of having the same kind of pattern giving two different signals. I have highlighted two bull shark patterns, two bullish signals where one produces a bullish move while the other causes a bearish move and a significant decline in price.

These two set-ups are identical, still far from apart. A quick view and study of the market will show just that.

So lets get into it:

How do you know if a bull shark is going to cause a reversal or a continuation?

Lets start with the (true) bull shark on the left. This is how it should have been traded:
https://www.tradingview.com/x/IwT2z6js/

Strong supply level at X. The shark completion point is 88.6% XC, with the stops just below the X point. Targets are the usual 50% and 88.6%
So what made this pattern a winner?

https://www.tradingview.com/x/8qA4c8la/

A quick view on the left side of the chart shows prices trending in a descending channel which simply means it is a downtrending market. The first sign of a reversal was when price broke the upper range of the channel and then traded above it. This caused a shift in momentum. If a bullish pattern then occurs you should expect a reversal based on the overall structure. If price starts to make lower lows, it just means the trend was stronger then usual and it could reverse at another level, for example the 1.13% XC for shark patterns. All though, a break below the structure does indicate that it is a strong trending market. We then look at the former leg and see a 150 pip decline, with the previous decline being 180 pips. This shows that the declines are getting smaller and smaller.

https://www.tradingview.com/x/dXEVbUQn/

https://www.tradingview.com/x/8qA4c8la/

Now lets look at the second bull shark pattern on the right side of the chart. Here we have a kind of extended shark, since we see a test of the 113% XC level, price fails to close below this level which means that the shark is still valid:
https://www.tradingview.com/x/JPOa6H7G/

Now, how come this shark pattern caused a decline?

Lets try to look at the structure again and the former leg again:
https://www.tradingview.com/x/xUpFOYZX/
https://www.tradingview.com/x/kC4SI17i/

By using the parallel channel this time we can visually see an ascending channel, which simply means the current market is in an uptrend. Now in an uptrend there should be no sign of a bullish trend reversal set-up, and you would simply need to ask yourself: Should a bullish reversal occur in an uptrend?
No, if it reverses in an uptrend its going down. Besides, we already know that a harmonic shark pattern is an emerging harmonic 5-0 pattern, which means the bull shark is now a bear 5-0.. Simple does it!
As you can see in the chart a 5-0 pattern usually causes a strong move depending on the pattern in the market. 261.8% of XC (OB) is a good profit target for these set-ups..


Thank you for reading and make sure you leave a like for the post!