Failed Patterns Against the Trend

There are many cases where distinct harmonic patterns form within an established channel but they are challenged by the predominant trend. For example, a bullish pattern that forms within a defined bearish trend channel can present a challenging situation from a technical perspective. If the bullish pattern yields a valid reversal and the price action can rally beyond the downtrend channel, the PRZ would represent a critical support point. However, if the price action continued to decline and violate the bullish pattern, this area might be regarded as another continuation of the established downtrend. Again, this is a situation where harmonic patterns must be regarded as signposts of potential future price action. These setups—whether they fail or not—are critical make-or-break pattern completions that reveal a vast amount of technical information within a few price bars of its realization. Although a failed pattern might not yield the initial desired result of a valid reversal, such price action often signals a significantly deteriorating technical state of the primary trend and it must be respected.