After more positive feedback received from the Gartley & Bat Pattern explanation, I have drawn the final illustration explaining my interpretation of the Cypher Pattern For those who have not yet seen the explanation for the Gartley or Bat Pattern I have attach the link in the comment section below.
Above Is an illustration of a complete Cypher Pattern and the rules and ratios needed to trade this pattern.
First things first, grab your Fibonacci tool and draw from the X to A leg of the initial move or impulse leg. The Fibonacci ratio's you are looking for are the 0.382%, 0.50% and the 0.618%, price MUST at least touch or spike through the 0.382% but not touch or exceed the 0.618%. The price reversal zone is shown in the white box.
Now you have the B leg we are looking for the C leg which is an extension of the A to B move. On this occasion grab your Fibonacci Extension tool and draw from the A to B and then back to A, you are looking for a minimum of the 1.272% extension.
On the C leg the price reversal zone is a little narrow on many occasion, price MUST hit the 1.272% but not exceed the 1.414%, which is once again shown in the illustration above.
Once you have the X A B and C legs you are looking for the final piece of the jigsaw which is the D leg completion and the area you are looking to buy. There are a couple of different ways to get the D leg however they both end up at the same price, for me personally I use the Fibonacci retracement tool. To get the D leg take your Fibonacci tool and draw from the X to C leg which will give you a 0.786%. Once price falls to the 0.786% all criteria's are met, at which point you would buy in anticipation that price will rise.
TARGETS: When looking to take targets on this pattern the first step is to once again use your Fibonacci tool. Take your Fibonacci tool and draw from the C to D leg, you are looking for the 0.382% and 0.618%. If this is the method you are looking to use for targets you would have your broker take off half of your position at the 0.382% and the other half at the 0.618% To protect the profits you have accumulated it is advised to move stop loss to breakeven once the 0.382% target 1 has been attained, thus giving you a risk free trade and money in the bank.
STOP LOSS: When looking to place your stops there are again many ways this can be done, but should always be placed below the X leg. Your risk reward should be a minimum of 1:1 on every trade to the 0.382%, if this can not be achieved then I would not personally take the trade.
CURRENCY PAIR: This pattern like any other and is more profitable with certain currency pairs, you should do your own back testing on this before trading the pattern.
I hope this is a more in-depth insight to advanced patterns in particular the Cypher Pattern . I am available via private message for any questions you may have.
DISCLAIMER: Please note I am only providing my own trading information for your benefit and insight to my trading techniques, you should do your own due diligence and not take this information as a trade signal.
@Obsy, G'day Mate , I got same question , have you got clarification for it?
Obsy
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@totetronico, no i never did, this conflicting views on the C leg is worrying but you can rely on the Cypher tool on trading view. that is what i use to fish out cyphers now. hope it helps you.
@totetronico, Fact! The C leg is drawn from the extension of X - A. Must touch 127 but not close above the 1.414. I took the training from the company who discovered it.
MitjaZunko
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Hello Tom,
did it take a lot of time to adjust your ayes to spot patterns on the chart :)?
UnknownUnicorn180388
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It is all about repetition, the more you master your craft the easier it becomes to train the eye.
Tiberious
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Hi Tom, thanks for your charts, I just want to double check; for the cypher pattern you look for C by making the extension move from A - B - A and finding C at 1.272, is this correct? I'm backtesting this way and another at the moment because there seems to be some differential between how traders find it