1. Introduction to the Five O Harmonic Pattern
The Five O Harmonic Pattern is a powerful trend continuation pattern first identified by Scott Carney. Unlike most harmonic patterns that predict reversals, the 5-0 helps traders:
✔ Identify strong trend resumptions
✔ Spot high-probability continuation entries
✔ Capitalize on extended market moves
✔ Trade with precise Fibonacci measurements
Unique Feature: The pattern completes at point “0” (zero), giving it the distinctive “5-0” name.
2. Pattern Structure & Key Fibonacci Ratios
The Five O Harmonic Pattern follows a 5-point structure (X-A-B-C-D-0) with these critical Fibonacci relationships:
| Wave | Fibonacci Requirement | Trading Significance |
|---|---|---|
| AB | 113%-161.8% of XA | Initial extension |
| BC | 161.8%-224% of AB | Deep retracement |
| CD | 0.5%% of BC | Secondary extension |
| XD | 0.113%-0.23% of XA | Continuation entry zone |
Bullish vs. Bearish Five O Harmonic Pattern
- Bullish Five O Harmonic Pattern: Forms in uptrends (Buy at 0)
- Bearish Five O Harmonic Pattern: Forms in downtrends (Sell at 0)
3. Step-by-Step Identification Five O Harmonic Pattern Guide
- Identify XA Wave: Strong initial trend move
- Measure AB Extension: Must be 113%-161.8% of XA
- Track BC Retracement: Should be 161.8%-224% of AB
- Confirm CD Extension: 0.5 of BC
- Spot D Point: At 0.133%-0.23% of XA
Visual Tip: The pattern forms a “lightning bolt” shape on charts, with the 0 point acting as the continuation trigger.
4. Trading Strategy & Execution
Optimal Entry Points
- Enter long/short at 0 point with confirmation:
- Bullish: Strong candle closing above 0
- Bearish: Strong candle closing below 0
Stop Loss Placement
| Pattern Type | Stop Loss Position |
|---|---|
| Bullish Five O Harmonic Pattern | Below recent swing low |
| Bearish Five O Harmonic Pattern | Above recent swing high |
Take Profit Targets
| Target | Fibonacci Level | Action |
|---|---|---|
| TP1 | 61.8% of CD | Take 50% profit |
| TP2 | 100% of CD | Take 30% profit |
| TP3 | 161.8% of CD | Close remaining |
5. Confirmation Techniques for Higher Accuracy
✔ Price Action:
- Bullish: Engulfing pattern at 0 point
- Bearish: Dark cloud cover at 0 point
✔ Indicator Confluence:
- ADX > 25 confirming strong trend
- MACD crossing signal line
✔ Volume Analysis:
- Increasing volume at pattern completion
✔ Timeframe Alignment:
- Confirm with higher timeframe trend direction
6. 5-0 vs. Other Harmonic Patterns
| Feature | 5-0 Pattern | Crab Pattern |
|---|---|---|
| Purpose | Continuation | Reversal |
| Completion | 0 point | D point |
| Risk/Reward | 1:3+ potential | 1:2 typical |
| Frequency | Moderate | Common |
7. Professional Trading Tips
- Trend is Your Friend: Only trade 5-0 in direction of larger trend
- Wait for Confirmation: Never enter before 0 point completion
- News Awareness: Avoid around major economic releases
- Backtesting Essential: Test on 100+ examples
- Position Sizing: 1-2% risk per trade maximum
- Be ware of Economic News.
8. Frequently Asked Questions (FAQ)
Q1: Why is the 5-0 pattern so effective for continuations?
A: The extreme Fibonacci extensions create exhaustion points where trends typically resume.
Q2: Best markets for 5-0 patterns?
A: Works exceptionally well in Gold (XAU/USD), EUR/USD, and BTC/USD.
Q3: How to avoid false signals?
A: Require:
- Precise Fibonacci ratios
- Strong trend background
- Volume confirmation
Q4: Optimal timeframes?
A: Most reliable on Daily and 4H charts.
9. Conclusion & Next Steps
The Five O Harmonic Pattern provides traders with:
✅ High-probability continuation signals
✅ Excellent risk-reward opportunities
✅ Clear structural rules
Recommended Action Plan:
- Study 30+ historical examples
- Paper trade for 2 weeks
- Develop personal confirmation checklist
- Start live trading with small sizes
🚀 Pro Tip: Combine with moving averages for trend confirmation.
Best Product To detect Harmonic Patterns is : ON Trade Waves Patterns
Example :
