Bullish Cypher
The Cypher pattern is another member of the Harmonic pattern family defined by the Fibonacci ratios between four legs of price movement.
- AB is a retracement in the range of 0.382 – 0.618 the first upwards impulse XA
- BC is an upwards retracement between 1.13 and 1.414 of AB
- CD will be a retracement between the range 1.272 – 2.00 below B
- CD retracement will fall at a 0.786 retracement level of the original impulse origin X
Bearish Cypher
The Bearish Cypher pattern is similarly structured in the opposite direction:
- AB is a retracement in the range of 0.382 – 0.618 the first downwards impulse XA
- BC is an downwards retracement between 1.13 and 1.414 of AB
- CD will be a retracement between the range 1.272 – 2.00 above B
- CD retracement will be at a 0.786 retracement level of the original impulse origin X
Cypher Pattern Identification with PatterSurfer
On arrival of a Cypher pattern, PatternSurfer will display all coordinates, including the Actual Pattern Completion Price (D) as per the market prices, as well as the Ideal Pattern Completion Price (an exact D as per the strict Fibonacci ratio). D defines the entry point for the Cypher pattern.
To maintain a profitable risk-reward ratio, the price at X can be kept as a conservative stop-loss for the trade.
With PatternSurfer, users are also able to identify the formation of a Cypher pattern before point D is reached. This is called an “Approaching” pattern, and traders will be made aware of the expected (Ideal) Completion Price, and the current Actual Completion Price which is approaching the Ideal D.