What is a Bullish Gartley Pattern?
- First introduced in 1935 by trader H.M. Gartley in his book, “Profits in the Stock Market”
- Contains a bullish ABCD pattern preceded by a significant high or low (point X)
- A visual, geometric price/time pattern comprised of 4 consecutive price swings, or trends—looks somewhat like an “M” on the price chart.
- A leading indicator that helps determine where & when to enter a long (buy) position, or where to exit a short (sell) position.
Why are Bullish Gartley Patterns important?
- Help identify higher probability buying opportunities in any market (forex, stocks, futures, etc.), on any timeframe (intraday, swing, position).
- Reflects convergence of Fibonacci retracement and extension levels at point D suggesting a stronger level of support, thus higher probability for market reversal.
- X-to-A ideally moves in the direction of the overall trend, in which case the move from A-to-D reflects a short-term correction of the established uptrend.
- May also indicate trend reversal when found near the bottom of the downtrend channel, or as a reaction coming of significant support at point X.
- May provide a more favorable risk vs. reward ratio, especially when trading with the overall trend.
So how do I find one?
Each turning point (X, A, B, C, and D) represents a significant high or significant low on a price chart. These points define four consecutive price swings, or trends, which make up each of the four pattern “legs.” These are referred to as the XA leg, AB leg, the BC leg, and the CD leg.
Bearish Gartley Pattern Rules (sell at point D)
- Swing down from point A-to-D will typically be 61.8% or 78.6% retracement of XA
- Must be valid ABCD pattern observed in the move from A-to-D
- Time from XA and AD ideally in ratio and proportion
- Limited instances where ABCD move completes at 100% of XA (double bottom)
- Time of XA and AD should be equal for “true” double bottom
- Pattern failure (price moves beyond point X) may indicate continuation move
- Price may move down to at least 127.2% or 161.8% of X to A move