Chart patterns known as harmonic patterns are undoubtedly one of the classic patterns which have been studied by many traders throughout their training within technical analysis. By mastering these types of price patterns, the use of this type of technique can provide early entries with a minimum of risk very near to price levels where there are trend changes. Harmonic patterns can be observed in any market.

For the short term, day traders can use this type of pattern in an effective way to buy and sell when the price touches an area of daily highs or lows. Gartley, the discover of this patterns, stated in his work that to buy or sell properly within a pattern of the type "AB = CD" (the best known among us) the market must be on a strongly established trend.
A change in a market trend or a strong correction may not always follow this pattern but you can even make profits by trading this price formation with proper money management and risk management in each trade, which requires some experience.

The pattern "Gartley 222" is named after the number of the page where it is explained (in H.M. Garley's own book "Profits in the Stock Market"). Since then, multiple books and financial analysts who have tried these types of harmonic patterns, extended the name under the pattern "222". Of the nearly 500 pages we find in H.M Gartley's book, none is more important than pages 221 and 222. It is there that the author describes his patterns in greater detail. Needless to say, the chart pattern described by Gartley is referred to as one of the most effective patterns and can generate quite a few benefits.

 Parallel trend lines

### The harmonic patterns

The first two Fibonacci ratios that we will find within the harmonic trading are:
• The first Fibonacci ratio of 1.618
• The previous reciprocal ratio 1/1.618, resulting in 0.618
From these two Fibonacci ratios you can get really interesting patterns inside trading, especially from the technical analysis of price charts. In addition we can obtain other ratios that are calculated through these previous ratios:
• Square root of 1.618 = 1.27
• Square root of 0.618 = 0.786
• Square root of 0.786 = 0.866
All these ratios are important and fit perfectly into the formation of harmonic patterns in trading. In fact all the work of Gartley patterns is based on these ratios.

### The Gartley patterns

Gartleys are patterns that include the basic ABCD pattern we discussed earlier, but are preceded by a significant high or low. Now these patterns are generally formed when a general trend correction occurs and resembles an "M" (or a "W" for bearish patterns). These patterns are used to help traders get on the general trend.
 Bullish and Bearish Gartley Patterns
A Gartley chart pattern is formed when the price action has continued during a recent bullish trend (or bearish), but has begun to show signs of a correction.

What makes Gartley such a cool setup, when it is formed, is that the reversal points are a Fibonacci retracement and a Fibonacci extension level. This gives a stronger indication that the pair will actually reverse.

This pattern can be difficult to detect and, when you do, it can be confusing to use all those Fibonacci tools. The key to avoid all the confusion is to take things one step at a time.

In any case, the pattern contains an ABCD bullish or bearish pattern, but is preceded by a point (X) that is beyond the D point. The "perfect" Gartley pattern has the following characteristics:
• The AB movement must be the 0.618 retracement of the XA movement
• The BC movement must be the 0.382 or 0.886 retracement of the AB movement
• If the retracemente movement BC is 0.382 of movement AB, then CD movemente must be 1.272 of movement BC. Consequently, if the movement BC is 0.886 of movement AB, then CD must extend 1,618 of movement BC.
• CD movement should be a retracement of 0.786 of movement XA.

### Animal figures within the Gartley patterns

As time went on, the popularity of the Gartley pattern grew and people discovered their own variations.

For some strange reason, the discoverers of these variations decided to give them names of animals, perhaps with the intention of spreading the harmonic patterns through a more colloquial form.

#### The Crab Pattern

 Bullish and Bearish Crab Pattern
In 2000, Scott Carney, a firm believer in harmonic price patterns, discovered the "crab." According to him, this is the most accurate among all harmonic patterns, because of the extreme potential reversion zone from the XA movement.

This pattern has a high risk-reward ratio because you can place a very tight stop loss. The "perfect" should have the following aspects:
• The AB movement must be the 0.382 or 0.618 retracement of the XA movement
• The BC movement may be the 0.382 or 0.886 retracement of the AB movement. If the retracement of the movement BC is 0.382 of movement AB, then CD must be 2.42 of movement BC. Consequently, if the movement BC is 0.886 of the movement AB, then CD must be the extension 3,618 of the movement BC.
• CD should be the 1.618 movement XA extension.

#### The Butterfly Pattern

 Bullish and Bearish Butterfly Pattern
Discovered by Bryce Gilmore, the perfect butterfly pattern is defined by the retracement 0.786 of the movement AB with respect to movement XA. This is also a price pattern with high reliability which has the potential to produce high profits and has a good risk/reward ratio.

The butterfly pattern contains these specific characteristics:
• The AB movement must be the 0.786 retracement of the XA movement.
• The BC movement may be the 0.382 or 0.886 retracement of the AB movement.
• If the retracement of the BC movement  is 0.382 of movement AB, then CD must be 1.618 of movement BC. Consequently, if the movement BC is 0.886 of movement AB, then CD must extend 2.618 of movement BC.
• CD should be the extension 1.27 or 1.618 of the XA movement.

#### The Bat Pattern

 Bullish and Bearish Bat Pattern
For the year 2001, Scott Carney found another harmonic price pattern called "bat". The Bat pattern is defined by the 0.886 retracement of the XA movement as a potential reversion zone. The bat pattern has the following qualities:
• The AB movement must be the 0.382 or 0.500 retracement of the XA movement
• The BC movement may be the 0.382 or 0.886 retracement of the AB movement
• If the retracement of the movement BC is 0.382 of the movement AB, then CD must be the extension 1.618 of the movement BC. Consequently, if the movement BC is 0.886 of the movement AB, then CD must be the extension 2.618 of the movement BC.
• CD should be the retracement 0.886 of the movement XA.

Chart patterns known as harmonic patterns are undoubtedly one of the classic patterns which have been studied by many traders throughout their training within technical analysis.

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