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Potential Reversal Zone

By LuxAlgoMay 30, 2026

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Potential Reversal Zone

Potential Reversal Zone projects a harmonic pattern's completion window before price arrives: from the last four alternating swings (X, A, B, C) it measures D from the XA ratio, the BC projection, and the embedded AB=CD®, drawing the band where the three converge. The definitive clean build of Scott M. Carney's Potential Reversal Zone auto-fits the Gartley, Bat®, Butterfly, and Crab® templates from the measured B retracement, scores each zone by measurement clustering, and manages the lifecycle through invalidation.

How to Trade the Potential Reversal Zone?

  • Zone projected: a scored box appears beyond the C pivot with template name, score, and width; fresh reads supersede same-direction pending zones.
  • Price enters the zone: the 0.382 / 0.618 AD retracements draw as initial targets.
  • Rejection confirmed: a close back through the near edge after a test, the reversal evidence the tool frames.
  • Invalidation: a decisive close through the far edge (or the X point, if selected) fails the pattern; stops conventionally sit beyond it.

All eight lifecycle events alert.

Potential Reversal Zone Settings

  • Swing Length (default 10): confirmation bars each side of a swing; larger values read bigger structures.
  • Ratio Template (default Auto (Best Fit)): a named set, or whichever best fits the measured B.
  • Ratio Tolerance (default 0.05): margin around the ideal ratios and the confluence score's price tolerance.
  • BC Projection (r_BC) (default Auto (Reciprocal of C)): snapped to the standard harmonic set unless fixed.
  • AB=CD Ratio (r_CD) (default Auto (Template)): 1.0 or the 1.272 / 1.618 alternates.
  • Minimum Confluence Score (default 1): zones scoring below are skipped.
  • Invalidation Reference (default Zone Far Edge), Measurement Levels, AD Retracement Targets, XABC Structure (all default enabled), Show Last Zones (default 3), and Event Markers (default disabled): drawing controls.

Frequently Asked Questions

Harmonic Trading was created by Scott M. Carney. Bat®, Crab®, Shark®, AB=CD® and 5-0® are registered trademarks of Scott M. Carney, referenced here under fair use to identify the patterns. LuxAlgo's tools are independent implementations and may differ from his official pattern definitions and software, available at HarmonicTrader.com. LuxAlgo is not affiliated with or endorsed by Scott M. Carney.

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Original indicatorBuilt in-house by LuxAlgo

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