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Gartley Pattern Examples And How To Trade It

Writing an article about price action patterns, or chart patterns, I noticed how popular harmonic patterns are. And I don’t know why many people are asking about a specific pattern: the Gartley pattern. It’s not a big deal, the only difference between the harmonic patterns and the normal patterns is one of them is based on Fibonacci levels.

Most of us know Fibonacci levels and the love many traders have for them. When used in the right way, those levels can be highly profitable. And the Gartley Pattern is not an exception.

So, if you’re starting to learn about the harmonic patterns and Fibonacci levels, this is a good way to start. I’m going to be talking about what’s and how it works, and in a very simple way, since I have dedicated myself to simplify Day Trading. Trading should not be complicated.

Related Read: Is Pattern Day Trading Illegal?

What is Gartley pattern?

The Gartley pattern chart is a harmonic chart pattern made by the price action of a financial instrument. The Gartley chart pattern is based on Fibonacci levels. And is made to help traders identify price points where a trend is going to break out or retrace. Most traders use the Gartley pattern to draw support and resistance levels. And it’s usually more used in the forex market.

The Gartley pattern was noticed by a trader called Harold McKinley Gartley in the ’30. He was the first one to use statistical analysis in the financial market. Some people called the ‘222 pattern’ since you can find it in 222 pages of the Gartley book, called “Profits in the Market”

How to draw Gartley pattern?

To draw the Gartley pattern, you first need to successfully identify it. And it’s a bit of a hassle to do it. This pattern usually resembles an “M” or a “W” shape made by the price action in a chart. Basically for a bullish Gartley pattern rules, it will have the shape of an “M” and for bearish Gartley pattern it will be a “W”

To draw the Gartley pattern, you need to follow the next steps:

  1. The movements start in the X and continue to the A.
  2. Here’s when Fibonacci levels come to play. The total distance between A and B needs to be close to 61.8% of the size of the movement from X to B.
  3. B to C should be a retracement of 88.6% or 38.2% of the previous movements (A to B).
  4. From C to D should take about 127.2% to 161.8% of the movement made by B to C.
  5. If C to D is completed you’ll need to measure the overall movement from A to D, and it should be 78.6% of the movement from X to A.
how to draw the gartley pattern
Example of a bearish gartley pattern. Picture

Gartley pattern target

No matter which Gartley pattern you found, you should always place your profit target and stop-loss. If take the previous graph, is recommendable you put your stop-loss somewhere below the D point and the X point. If you’re a more conservative trader, is recommendable you put your profit target a C or halfway C. It’s pretty straightforward.

Gartley Pattern Examples

As you can see, it takes a bit of time and practice to fully identify Gartley pattern and draw it properly. Gartley pattern trading can be highly profitable. Since Fibonacci levels and Harmonic patterns are famous for their rate of success. The biggest difference between Gartley pattern and the normal price action chart pattern is Fibonacci. Due to this, the harmonic patterns are more restricted when it comes to identifying them, but this doesn’t reduce the chances to found one. Here’s a Gartley pattern example in a trading chart:

Gartley pattern example
Gartley pattern example. Image from Investopedia