Harmonic Pattern, Dragon Pattern, Forex Strategy, Dragon Reversal
📖 What is a Dragon
Harmonic Pattern?
The Dragon Pattern is a unique harmonic reversal
setup resembling the shape of a dragon lying flat. It features and resemble double
Top (M shape) and signaling trend reversal. In bearish setups, the dragon
forms at the top and suggests a downside reversal.
✅ Pattern Components (ABCDE
Points):
- Point
A: Initial low
- Point
B: Trend continuation (forms the left Top)
- Point
C: Retracement to form new upside trend line
- Point
D: Retest near Point B but price remains lower then point B
- Point
E: Pullback and trendline break trigger
In your sell setup:
- Sell
at the midpoint of BD
- Stop
Loss above point B
- Take
Profit at point C
📊 Example Chart:
USDCAD – 30 Min Chart (16-May-2025)
Dragon pattern completed with clear ABCDE structure:
- Sell
Zone: Midpoint of BD
- Stop
Loss: Just above point B
- Take
Profit: Targeted at point C
🔍 Key Confirmation
Factors:
- Pattern
aligns with resistance zone or fib retracement.
- Bearish
candle at midpoint of BD (sell trigger).
- RSI
divergence often supports pattern reversal.
- Optional
trendline break from point D to E for extra confirmation.
🔧 How to Trade the Dragon
Pattern
🕒 Time Frame
✅ Works best on M15 to H4
for intraday trades.
🛠️ Trade Setup (Sell)
- Identify
a clear ABCDE Dragon pattern.
- Price
reaches midpoint of BD – look for bearish price action.
- Validate
with confluence like resistance zone or RSI divergence.
🎯 Entry
✅ Enter short at the midpoint
of BD, ideally with bearish candle confirmation.
📉 Stop Loss
✅ Set above point B,
allowing buffer for volatility.
💰 Take Profit
✅ Aim for point C, which
aligns with the second bottom or neckline.
📘 Example Trade: Dragon
Bearish Setup
- Pair:
USDCAD (30M)
- Pattern
completed: 16-May-2025
- Sell:
1.3983 (Mid of BD)
- Stop
Loss: 1.4017 (Above point B)
- Take
Profit: 1.3902 (Point C)
✅ Conclusion
The Dragon Harmonic Pattern offers a creative and
visual way to catch reversals early. Especially useful for M15–H4 traders,
this pattern:
- Requires
disciplined entry at the BD midpoint
- Rewards
with early positioning before trend shifts
- Becomes
powerful when supported by confluence
Master this setup with backtesting and confluence
strategies to add a high-probability reversal tool to your trading playbook.
