Trade Setup
Once the X and A points have been identified the B point is formed by inputting a precise 78.6% retracement of the XA leg. Therefore, B must be must be 1 pip more than 70.2% (halfway between 61.8% and 78.6%) and 1 pip less than 83.6 (halfway between 78.6% & 88.6%).
The C point is valid if it touches at least a 38.2% retracement of the AB and it does not exceed the A point (100% AB).
The Potential Reversal Zone (PRZ) is calculated as a combination of the 127.2% extension of the XA leg, 127.2AB=CD movement level (so the same distance as 127.2% of the A-B leg but this should be copied across and measured from the C point) and finally, the corresponding BC extensions:
224.0% of the BC if the C-point is precise 38.2% of the AB,
224.0% of the BC if the C-point is precise 50%% of the AB,
200.0% of the BC if the C-point is precise 61.8% of the AB,
200.0% of the BC if the C-point is precise 70.7% of the AB,
1.618% of the BC if the C-point is precise 78.6% of the AB,
1.618% of the BC if the C-point is precise 88.6% of the AB.
None of the levels should extend past 141.4% extension of the XA
Harmonic Butterfly Target 1: 38.2% retracement of the AD leg.
Harmonic Butterfly Target 2: 61.8% retracement of the AD leg.
Harmonic Butterfly Stops: My personal preference is 161.8% XA however, the conventional level is at 141.4% XA.
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