Pattern Violation Conclusion

The concept of prior blown-out PRZs acting as an opposite technical level is founded in the principle that harmonic patterns are primarily a “signpost of future action.” I initially discussed this in The Harmonic Trader. Essentially, the critical information is revealed by the price action in the Potential Reversal Zone (PRZ). Although valid patterns are quite accurate and identify excellent trading opportunities, there are many cases where the predominant trend overwhelms the anticipated completion of a pattern. Despite the failed reversal, the distinct price action at the completion of a pattern frequently possesses extraordinary behavior that acts as a clear signal for the continuation of the predominant trend.