Harmonic pattern

Five turning points, labelled X, A, B, C and D, define four legs. Each named pattern is a rule set stating the ratio band each leg has to fall within when measured against an earlier leg, and the D point is the level at which the structure is said to complete. It is a classification of geometry rather than an indicator: nothing is calculated across the whole series, and the only arithmetic is the division of one swing by another.

The ratios come from the same sequence that produces Fibonacci retracement and Fibonacci extension levels. A Gartley and a bat differ chiefly in how far the final leg retraces the first; a crab pushes its completion point beyond the start of the structure entirely. Tolerance bands around each ratio are conventional and differ between authors, which is why two analysts working the same chart can name two different patterns without either misreading a number.

Two things trip readers up. The structure can only be named once its final point is in place, so a pattern read on a finished chart was not available in the same form while it was forming; and the swing highs and lows it is measured from depend on the swing definition and the timeframe chosen, so the same price history yields different patterns under different settings. The disagreement here is unusually sharp. Supporters treat the published tolerances as tested rules with recorded outcomes, and critics point out that the number of permitted variants makes some pattern locatable in almost any price history, which is a property of the rule set rather than of the market.