Pattern Completion Zone
Pattern Completion Zone, also known as Pattern Completion Interval, is the trading zone found in various price patterns like Triangle Pattern, Falling Wedge Pattern, Rising Wedge Pattern, Fibonacci Price Pattern, Harmonic Pattern, X3 Chart Pattern, Elliott Wave pattern and so on. Pattern Completion Zone is very useful technical anlaysis concept first appeared in the Book: Guide to Precision Harmonic Pattern Trading (Young Ho Seo, 2016). Pattern Completion Zone is significant because it provides the edge to the price pattern or price action trading taking them from the loose science to more measurable science.
Usually, the Pattern Completion Zone is the box zone around the point within the path of the price pattern. The point means either peak or trough in your chart. For example, in ABC Fibonacci price pattern, the pattern completion zone can be formed in point A, point B and point C. However, the the Pattern Completion Zone at Point C is probably most important for your trading. Likewise, in the Harmonic Pattern, the Pattern Completion Zone can be formed in any point in XABCD point. However, the Pattern Completion Zone at Point D is most important for your trading.
Pattern Completion Zone serves two purpose for your trading. Firstly, it provides you the decision making area in your chart. For example, you can use the pattern completion zone much like trading with support and resistance. The good thing is that Pattern Completion Zone is easier to use because it provides the reactable price area for the trader. In the traditional trading strategy, trader used line to trade, for example, as in support and resistance. Typically, trading with line is harder as the trader needs to monitor how far the price is deviated from the line. This is a tiring job for the trader. Plus this can be subjective if you are using the line to trade although there are few methods to correct this subjective problem. For example, Young Ho Seo proposed two methods Symmetrical Trigger Level and Symmetrical Fibonacci Retracement in the book: Scientific Guide to Price Action and Pattern Trading. Still, many trader thinks that using the trading zone like the Pattern Completion Zone is easier and less subjective.
Secondly, the Pattern Completion Zone helps you to manage your trading risk. For example, you can use the pattern completion zone to define your stop loss and take profit level in your Forex and Stock market trading. The reason this works is that the pattern completion zone is formed at the rejectable price level for that pattern. The stop loss around the Pattern Completion Zone is sensible one although the expert will teach that you could add some margin around. The advantage of this method is that you can calculate your risk reward ratio or reward risk ratio intuitively. Just think your stop loss and take profit level in term of the multiple of the height of pattern completion zone. Pattern Completion Zone will teach you that your odd to win is always tied to your amount of risk and reward. This way you can trade and manage your risk in quantiative way.
Just for your information, here are some Harmonic Pattern Scanner that automatically detect patterns and calculate the Pattern Completion Zone for your trading. These tools will save you a lot of time if you are trader as they are automated pattern scanner.
Harmonic Pattern Plus (and also Harmonic Pattern Scenario Planner) is the powerful but they are the repainting Harmonic Pattern Scanner. At the same time, they are cheaper. If you do not like the repainting harmonic pattern indicator, then you might have to check the X3 Chart Pattern Scanner below.
X3 Chart Pattern Scanner is non repainting and non lagging Harmonic Pattern and X3 pattern Scanner.