Gartley Butterfly Pattern

Gartley Butterfly Pattern

Gartley Butterfly Pattern

Conducting graphical analysis on Forex is subject to a single judgment: under the same conditions, traders will behave in the same way. This pattern is confirmed if you look at the history of the chart. There you can see that when certain patterns occur, the market reacts to them accordingly. Note that there are a huge number of patterns on Forex. Among them, special attention should be paid to the Hartley butterfly, since there are quite a lot of its varieties and this formation is considered one of the strongest.
Little history

Harold Hartley was well known in wall Street trading circles in the mid-20th century. He was highly regarded as a consultant, educator, founder of the society of securities analysts, and bachelor of Commerce. What to say, if at that time its courses were sold at record high prices of 1500 US dollars. For comparison, this money could buy three Ford cars in the United States. Harold's unprecedented fame came after the discovery of the pattern, the name of which he gave the name "Hartley's butterfly".

Trading these patterns is quite difficult. However, it is worth it, since the Butterfly pattern on Forex is a fairly strong figure, which in most cases is worked out. Note that Gartley patterns appear quite rarely. Also, it is sometimes not always possible to notice it. But if the trader still finds it, then he is faced with the task of making the appropriate markup, which takes a lot of time. If we talk about the goals and limits of losses, then the harmonic Hartley models do not imply any clear rules for setting Take Profit and Stop Loss.
Accepting trading using Gartley patterns

If we take into account all of the above, we will study the trading process in which we will start from the Hartley butterfly. Over time, Harold Hartley's followers discovered other alternative harmonic patterns. Among them are "Bat", "Pesavento butterfly", "Crab" and others.

In order to solve the problem of building a Gartley formation on price charts in the 21st century, you can use software to check in a split second whether a Gartley butterfly has formed on a particular asset. This is the ZUP indicator.
How to build a butterfly Gartley?

The Gartley Butterfly formation is similar to the Elliott wave correction (ABC). It is based on the same ZigZag indicator polylines, based on the corrective Fibo levels. However, there is still some difference:

The Hartley butterfly is formed according to the rule of equality of waves AB and CD.
The Fibonacci tool is stretched along the entire wave XA in such a way that t. B is located at the Fibo level of 61.8, and T. D – at the level of 78.6.
So we get a technical analysis figure that is visually very similar to the wings of a butterfly.

The "Butterfly" figure has one advantage in technical analysis. It is formed at the most extreme point of the rollback. This allows the Forex trader to take appropriate steps in advance as part of a further market reversal. In other words, it can enter the market at the best price.

Once again, we emphasize that the Gartley butterfly pattern is an ideal figure, which is quite rare. But in addition to the classic butterfly, other harmonic models were discovered: "shark", "crab", "bat", etc.

Since it takes a long time and is not so easy to build a Butterfly figure on Forex yourself, you can use a special Forex indicator. We mentioned it above.
Description of the indicator that builds Gartley patterns

If you want to quickly assess the market situation using Gartley formations and get potentially profitable entry points for various assets, then you need the ZUP indicator.

Objectively speaking, this is a highly accurate trading tool in the Forex market. It has many settings and can automatically detect and highlight different variations of butterflies on the price chart.

Using the ZUP indicator in trading is quite simple. When the "Butterfly" pattern is formed, you need to pay attention to the red rectangle. In it, you can stretch the Fibonacci grid.
In the screenshot above, we can see a signal from the ZUP indicator to the bullish Hartley pattern (when AB=CD). Now you can search for entry points using the Fibonacci levels drawn in the red rectangle.

You can consider the ZUP indicator a universal tool, since the market initially moves in cycles. Therefore, we can use this indicator on any timeframe (preferably on higher timeframes).

In this post, we have the most famous Gartley patterns, including a description of the Gartley butterfly. We also showed how signals for bullish and bearish butterfly signals work on Forex. In addition, we have provided an opportunity to download the ZUP indicator, which allows you to automatically determine these candlestick formations on any timeframe, which makes life easier for a trader. Observe risk and money management, and there will be an order of magnitude more profitable trades.

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