Thursday, November 15, 2018

What is the Gartley Pattern

This is a well-known technical analysis in the 1930s where there was a trader who created a method for trade that is still valid today. Here we will learn how to trade market turning points based on Fibonacci retracement and market psychology with the Gartley Pattern.

Many traders ask how the way of trading that is more than 80 years old even almost 90 years is still valid today. If you combine timeless trading tools such as Fibonacci Retracements with the characteristics of successful traders, it's easy to see why this method is so popular. If the aspects of the trading method appeal to you, it's nice to introduce you to the Gartley chart pattern.

What is the Gartley Pattern?

The Gartley Pattern is a strong and multi-rule rule-based trading arrangement that utilizes market fatigue and provides a big risk: reward ratio. This pattern is also known as "Gartley 222" which is because this pattern originates from the Gartley Book 222 page, Profits on the Stock Market published in 1935 and reportedly sold for $ 1,500 at the time.

The Gartley pattern is based on the main turning point or fractal on the market. This pattern plays on the exhaustion trend reversal and can be applied to the time frame you choose. Another key that makes this pattern unique is the very important Fibonacci Retracements and comes together to complete this trading plan.

There is a bullish / long / buying pattern and a strong / bearish / short / selling pattern. Just as you will find with a head and shoulder pattern that you buy or sell based on fulfilling a trading plan.

Here is a stripped down version of the pattern so you can see what it looks like without the price and time in the table.

The buying pattern will always look like "M" with an elongated front. The selling pattern will always look like "W" with the elongated front foot.
Gartley's Strategy Tool

Three important tools to use on your chart when finding Gartley are:

Fractals - An important part of Gartley pattern trading is that you will track the pattern of the turning point or swing in the market. One of the better indicators to identify swing well is Fractal. The fractal appears as an arrow above the price swing.

Fibonacci retracements will make or break pattern validity. The following are specific retracements that form a pattern. Fibonacci retracement lines are horizontal lines that display support or resistance in a movement.

Add Lines (Optional) - This line will allow you to clearly draw connecting points such as X to A, A to B, B to C, and C to D for easy measurement.

Gartley's Rules of Strategy

Point B must retrace 0.618 from the XA movement.

Point D must retrace 0.786 from the XA movement and make an entry zone.

Point D must be a BC displacement of 1.27 or 1.618

Point C must trace back from 0.382 - 0.886 AB movements.

Buy or Sell at point D depending on whether the pattern is bullish or bearish

Place the stop below the entry for the strongest reward ratio or Risk, or below Point X.

If the market trades through Point X, the Gartley pattern is invalid and you must exit or not trade.

If these rules are met, you can find yourself at the peak of trading in the Entry Zone. Acknowledging these points on the market is really like riding a bicycle. After you understand it, the level will appear on your Chart.

Bearish Gartley EURNZD pattern is ideal towards the Reserve Bank of New Zealand Interest Rate Announcement.
Other set ups are formed in EURJPY and have started playing, you can sell at Point D and place a point above point X. Point X is the beginning of the pattern and is the extreme point on the graph.

Tips for Closing Using This Pattern

When trading the Gartley pattern, the pattern is intended to trade only on D. If you believe a pattern is ongoing but we are only at point B, be patient and hold until we reach D. The strength of the pattern comes from a combination of Fibonacci levels from all points from X to D and use patterns that have been completed for well-defined risks.

Finally, this can be traded in the time frame you want. The reason this method has a stable track record is because it is based on an unusual market position where most traders are afraid to enter. Take advantage of the risks: rewards are available and trade with the right size of trade.

This pattern often occurs. If you feel comfortable using the Fibonacci retracement to get support and resistance, you will find yourself looking for points to complete the Gartley pattern.


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