Cypher Pattern Indicator
Platform: MT4 Type: Pattern Last update: October 6, 2024The Cypher Pattern Indicator for MT4 provides an optimal solution for identifying significant price formations in forex charts by pinpointing accurate buy/sell zones through Fibonacci extensions and it’s available to free download.
What Is Cypher Pattern In Forex Trading?
The Cypher harmonic pattern is a forex technical analysis formation that denotes a reversal in price action. It was discovered by Darren Oglesbee and is considered a relatively complex pattern formation. Although structurally similar to the butterfly harmonic pattern, the Cypher pattern is not frequently observed in charts due to its distinctive Fibonacci ratios.
How To Identify The Cypher On Charts?
In order for a pattern to qualify as a Cypher pattern, it must satisfy certain conditions, including:
- retracement of point B between 38.2 to 61.8 percent of XA, with no excess over 61.8 percent;
- extension leg C reaching at least the 127.2 percent level, and no more than 141.4 percent, otherwise it is invalid;
- CD leg breaking the 78.6 percent level of the XC point, and price reaching anywhere within 38.2 to 61.8 percent range of the potential reversal zone of D.
Its success rate is hard to compare to other harmonic patterns like Bat and Gartley, however, it works better in calm markets and becomes less reliable in trending markets after news.
Don’t worry, you won’t have to spot these patterns manually as the gauge does the job automatically.
How To Use The Cypher Pattern?
Harmonic Cypher patterns, like other harmonic patterns, require the Fibonacci ratios between points to match for pattern validation before executing a trade. These patterns adhere to precise numbers and shapes, without which trades cannot be made.
After confirmation of the pattern at point D, a trader enters a position at this level. However, the objective is always to enhance the probability of success when employing chart patterns.
To identify the optimal entry point, forex traders can utilize trend reversal indicators such as RSI, MACD, and Stochastic to confirm the reversal.
Settings
There are lots of variables you can customize in the settings window, however, you can leave it default.
Conclusion
The Cypher Pattern is a powerful MT4 indicator that simplifies forex and stock trading through harmonic price structures. Although beginners may perceive it as an advanced trading strategy, the indicator’s straightforward chart demonstration enables easy identification of Cypher patterns, facilitating rapid decision-making regarding trade entries or exits. Furthermore, it complements other trend oscillators such as RSI, Stochastics, and MACD.
