Australian Dollar (AUD_A0-FX): 15-Minute Bearish Gartley in Bearish Trend Channel In Figure 4.18, the Aussie $ formed a Bearish Gartley after declining steadily over the previous few sessions. The price action held firmly within the bearish channel and formed a distinct pattern that marked the dramatic continuation of the established downtrend. Figure 4.18 Despite exceeding the top range of the downtrend channel, the price action sold off sharply after completing the pattern. This example demonstrates the effectiveness of bearish patterns as critical continuation signals within established channels. In fact, patterns like these that complete slightly beyond the constraints of the established downtrend frequently can provide significant reversals. Chapter 4 Harmonic Patterns Relative to the Trend

Bearish Complex Extension Patterns within Bearish Channels Bearish extension patterns such as a Crab, a Butterfly, or an Alternate Bat typically possess more volatile corrective price action yet remain within the constraints of the established channel. Figure 4.19 illustrates a Bearish Crab, but any of the extension patterns can be applied to these situations. D X 1 . 6 1 8 0.618 B 3.1 4 0 . 7 8 6 C A Figure 4.19 Although extension patterns frequently experience more volatile price action, these setups offer unique trading opportunities. In many of these cases, the PRZ sits just above the upper range of the bearish channel, often creating volatile price action as the pattern completes. 131 132 Harmonic Trading: Volume Two

Apple (AAPL): 5-Minute Deep Bearish Crab Pattern within a Bearish Channel Apple formed a Deep Bearish Crab within a defined downtrend (see Figure 4.20). In fact, the stock declined steadily within a defined range that contained the price action before it formed the pattern that marked the significant continuation. The Deep Bearish Crab that developed at the top range of this trend channel clearly illustrates the importance of harmonic patterns as signposts of future price action. Figure 4.20 The stock completed the Deep Bearish Crab, as it retested the top range of the channel. Apple stalled at this resistance and sold off sharply following the reversal. Chapter 4 Harmonic Patterns Relative to the Trend

Apple (AAPL): 5-Minute Deep Bearish Crab Pattern within a Bearish Channel The enlarged chart in Figure 4.21 clearly shows the combination of the top range of the downtrend channel and the patterns PRZ converging to define critical harmonic resistance in the $212 area. Again, this pattern signaled yet another continuation in the persistent bearish trend on the daily chart. Figure 4.21 Apple demonstrated the importance of patterns that form in the direction of the trend. Well-defined trend channels should be clear and confine price action in a precise range. Within these constraints, patterns can form to signal the strength of the price action and identify optimal entry points for trade executions that attempt to follow in the direction of the predominant trend.