Harmonic Trading. The Gartley Pattern
Previously, we have already discussed the basics of harmonic trading and the Bat pattern. Come back to these posts if you need to refresh your knowledge. Today, let’s learn more about the Gartley pattern. This one of the most popular patterns in harmonic trading was named after its founder, H.M. Gartley.
Pattern description
The Gartley pattern is controversial. Despite the varying interpretations within The Great Gartley Controversy, the most harmonic Gartley pattern possesses distinct characteristics at all points within the structural rules that were originally outlined in “The Harmonic Trader.”
The Gartley pattern is characterised by the following elements:
- Precise 61.8% B-point retracement of XA leg.
- BC projection must not exceed 1.618.
- The equivalent AB=CD pattern is the most common.
- 0.786 XA retracement.
- C point within range of 0.382–0.886 retracement.
The Bullish Gartley pattern
A distinct AB=CD and a 0.786 retracement define the Potential Reversal Zone (PRZ) in the Bullish Gartley. However, these conditions are valid only with a 0.618 B-point retracement of the XA leg.
The BC projection should complement the other numbers in the PRZ, such as 1.13, 1.27, 1.41, or 1.618. It is important to note that Gartley does not utilize any BC projection that is greater than 1.618. Any BC projection that is greater than 1.618 is usually found in Bat structures.
The Bearish Gartley pattern
The Bearish Gartley structure is principally identified by a 0.618 B point retracement of the XA leg The other elements of the pattern – the AB=CD, the BC projection, and the 0.786 retracement – should converge within proximity of each other to define the PRZ.
Again, it is important to point out that the “0.382;0.886” Fibonacci retracement range for the C point can be any of the harmonic trading ratios that fall between these two constraints. Therefore, the C point can be 0.382, 0.50, 0.618, 0.707, 0.786, or 0.886.
The Perfect Gartley pattern
The perfect Gartley pattern is primarily defined by an exact 0.618 retracement at the B point. Although the ideal price action should test the entire range of the Potential Reversal Zone (PRZ), the minimum AB=CD, and the 0.786 XA leg still represent.
The structure should be distinct and possess ideal symmetry. In addition, the AB=CD should be a perfect bullish structure with 0.618 and 1.618 ratios at the respective points. The combination of these elements defines a remarkably ideal setup with a particularly critical PRZ. Although these structures are rare, they represent the best alignment of all the Gartley variations.
The Perfect Gartley should possess the following elements:
- Precise 0.618 B point retracement of the XA leg.
- Precise 0.786 D point retracement of the XA leg in the PRZ.
- Mandatory 1.618 BC projection.
- Equivalent and Perfect AB=CD (0.618/1.618) with distinct symmetry and time duration for each leg.
- C point at a 0.618 retracement.
Summary
Let’s repeat the main characteristics of the Gartley pattern. The 0.618 B point retracement is critical in defining a valid Gartley structure. Although the 0.786 XA retracement is an important element of the structure, the equivalent AB=CD within the pattern is the most critical completion point in the Potential Reversal Zone (PRZ). Furthermore, the AB=CD completion is a mandatory minimum requirement for all valid Gartley patterns.
The Gartley pattern must include these specific conditions to define the best harmonic structures:
- Precise 0.618 B point retracement of the XA leg.
- Precise 0.786 D point retracement of the XA leg in the PRZ.
- 1.27 or 1.618 BC projection.
- Equivalent AB=CD.
- C-point retracement can vary between 0.382 a 0.886.
Although the Gartley may resemble a Bat, the Fibonacci ratios utilized in the setup are unique to this pattern. In addition, the pattern should be quite distinct and possess an ideal symmetry.
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