A leading technical analyst of the s created a method for trading that is still applicable today. Learn how to trade market turning points based on Fibonacci retracements and market psychology with the Gartley Pattern.
Many traders ask how a trading method that is 77 years old is applicable today. The Gartley pattern is a powerful and multi-rule based trade set-up that takes advantage of exhaustion in the market and provides great risk: The Gartley pattern is based on major turning points or fractals in the market. This pattern plays on trend reversal exhaustion and can be applied to the time frame of your choosing. The other key that makes this pattern unique are the crucial Fibonacci retracements that come together to fulfill the plan.
Much like you would find with a head and shoulders pattern you buy or sell based on the fulfillment of the set up. Here is a stripped down version of patterns so you can see what the look like without price and time on the chart. The buy pattern will always look like an "M" with an elongated front let. The sell pattern will always look like a "W" with an elongated front leg. Fractals - The important part about trading the Gartley pattern is that you will trace the pattern from turning points or swings in the market.
One of the better indicators to trace swings is Fractals. Fractals show up as arrow above swings in price. Fibonacci Retracements — The Fibonacci retracements will make or break the patterns validity. Below are the specific retracements that make up the pattern. Fibonacci retracement lines are horizontal lines that display support or resistance in a move. When these rules are met, you can find yourself on the cusp of a trade at the Entry Zone. Recognizing these points in the market is truly like riding a bike.
Once you get the hang of it, the levels will pop out on the chart to you. If you liked the set up, you could sell at Point D and place a stop above point X. Point X is the start of the pattern and is an extreme point on the chart. Closing Tips on Us ing This Pattern. When trading the Gartley pattern, the pattern is meant to be traded at D only. The power of the pattern comes from converging Fibonacci levels of all points from X to D and using the completed pattern for well-defined risk.
Lastly, this can be traded on any time frame you prefer. The reason this method has a stable track record is that it is based on unusual market positions where most traders are afraid to enter.
Take advantage of the risk: This pattern occurs rather frequently. When you get comfortable with using Fibonacci retracements for support and resistance you'll find yourself looking for the points to complete a Gartley pattern.
It is very important to watch for the D point to be at DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Click here to dismiss. What is the Gartley Pattern? Foundations of Technical Analysis: Classic Chart Patterns, Part I. Upcoming Events Economic Event. Forex Economic Calendar A:More...