The Gartley Pattern

Last updated 7/6/2011 2:25 PM EST (GMT -5) 53 Comments

FX360 Technical Analyst Staff

Technical Analyst, GFT

What is a Gartley pattern?

Why is the Gartley pattern important?

How do I find a Gartley pattern?

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. Each pattern has both a bullish and bearish version. Bullish patterns help identify higher probability opportunities to buy, or go “long.” Bearish patterns help signal opportunities to “short,” or sell. In addition to the following guidelines, ABCD pattern rules/characteristics are still in effect and must be observed (for example, warning signs such as wide-ranging candles and/or gaps prior to pattern completion).

                                                 Bearish Gartley Pattern Rules (sell at point D)

1.   Swing high from A-to-D ideally at the 61.8% or 78.6% retracement of XA

             - Valid ABCD pattern must be observed in move from A-to-D.

2.   Time of AD ideally "equal" to XA, but may fall within 61.8%-161.8% time of XA

3.   Limited instances where ABCD move completes at 100% of XA (double top)

             - Note: Time of XA and AD should be equal for “true” double top

4.   Pattern failure occurs when price moves above point X, and may indicate a strong continuation move is in progress

             - Price typically moves up to 127.2% or 161.8% of XA

                                                 Bullish Gartley Pattern Rules (buy at point D)

1.   Swing low from A-to-D will typically be 61.8% or 78.6% retracement of XA

             - Valid ABCD pattern must be observed in move from A-to-D.

2.   Time of AD ideally "equal" to XA, but may fall within 61.8%-161.8% time of XA

3.   Limited instances where ABCD move completes at 100% of XA (double bottom)

             - Note: Time of XA and AD should be equal for “true” double top

4.   Pattern failure occurs when price moves belopw point X, and may indicate a strong continuation move is in progress

              - Price typically moves down to 127.2% or 161.8% of XA

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Comments (53)

Derekis

April 12, 2010 at 09:32 PM ET

Hi Roger,
Is there any software or MT4 indicator to automatically detect the Gartley pattern?
Seems pretty complicated to manually measure all these fibo levels.
Many thanks in advance.

rstojsic

April 13, 2010 at 01:37 PM ET

Hi Derekis,
I’m not sure about MT4, but I believe there is a piece of subscription based software called Ensign that has this type of pattern recognition. Autochartist is another program that has a Gartley & butterfly pattern detection service which I helped develop and is exclusive (and free) to GFT clients (it also identifies to other, more common patterns like triangles, wedges, double tops/bottoms, etc. along with targets and alert notification). You can find some more info at... http://www.gftforex.com/tradingtools/forex-trading-tools.asp . Dealbook360 (GFTs trading/charting platform which I use exclusively) also has a helpful ABCD drawing tool that makes it easy to project the potential D points of an emerging ABCD pattern (either AB=CD, or the 127.2% & 161.8% ABCD extensions). Autochartist also detects simple ABC retracements which help identify emerging patterns vs. just the completed Gartley/butterfly/abcd patterns). There are other extremely helpful tools in Dealbook360 like a Fibonacci time retracements/extensions tools in addition to the standard fib price retracement/extension tool, Foresight A.I. (a leading day trading artificial intelligence program that helps identify intraday trend and reversal timing. there is a fee for this tool, and it must be used with some sort of pricing analysis (support/resistance), but it's extremely helpful in confirming day trading entries and/or exits especially when used in conjunction with these geometric price/time patterns). Either way, I think it’s important to understand how these patterns develop in relation to the fib retracement/extensions, and being able to do it manually goes a long way even if you’re using a detection service. Hope this helps!

MoneyManager

April 14, 2010 at 03:35 AM ET

Derekis, it would not matter if you could detect a Gartley pattern via software or not. "Long bars", while certainly a valid trade negation, is subjective, and not easily, if at all, able to be defined by software. Sadly, this system is not back-testable for that reason. One *could*, possibly, come up with a definition that would be binary, I suppose. Then we would have to compare back tests with various definitions of long bars, over various periods of time leading up to trade-entry target. I suggest you all go out and buy Amibroker right now. ^_^

BTW, Roger or Brad, do you have any statistics on your own trading? (There's that problem with "long bars" again, I know, but I'll trust you.) ^_^

FXDragon

April 14, 2010 at 05:58 AM ET

You can get some accuracy on long bars using monte carlo simulation. By putting 100s of long bar cases in the past of a pair and define it for a specific pair. Just for probabilities of past occurances happening, not full proof!

rstojsic

April 14, 2010 at 11:24 AM ET

yes, i have detailed stats, and would love nothing more than to be able to bring them to light, but unfortunately there are preventative compliance/regulatory issues involved

Whit

March 16, 2011 at 09:14 PM ET

I think the MT4 indicator you're looking for is ZUP_v88. If you do a search for forex indicators, ZUP will get you where you want to be for this. It is available as a free download. I left extra spaces to make it easier to copy-paste for your search.. If you have problems finding it, feel free to skype me dave_whitford and I will search my archives and send it direct for you to download that way.

ron-mmi

April 13, 2010 at 09:56 AM ET

It looks like you made a mistake. At the top you show two different diagrams, one for the bearish and one for the bullish Gartley rule. Then in your discussion, you first give the bearish Gartley pattern and rules. Then the second display and discussion above is stated as being the bullish Garley pattern rules and diagram. Instead you just repeated the bearish Gartley pattern rules and diagram. Could you please redo this article showing the bullish and bearish rules and patterns and post it again for all of us. I have not known about the Gartley rules previously and would like to be sure that i really understand them. Thanks. Ron Thurman

rstojsic

April 13, 2010 at 01:15 PM ET

Hi Ron, thanks for the heads up...somehow the graphic of bullish gartley was replaced with the bearish version resulting in the duplicate and has now been fixed, but the information is still correct (bullish vs. bearish rules are nearly identical since bullish and bearish patterns are simply mirror opposites). i'm going to re-post just to make sure that everyone has the correct version, thanks again.

redback

April 14, 2010 at 05:37 AM ET

Hi Rodger, could you please explain how to define a trend convergence.

Regards, David.

rstojsic

April 14, 2010 at 11:50 AM ET

great question, but because "trend" is such a subjective term (i.e. type of trend based on timeframe, how trend is identified, for examples) it's a little difficult to explain without pointing to some examples (this is in the works, but i try to display this in majority of the reports, so here's the quick and dirty version)....the only "indicators" I use aside from these patterns and corresponding price/time Fibonacci retracements & extensions are simple trend lines/channels (in conjunction with multiple timeframe analysis). For me, it's about how/where these patterns "fit" into relation these. One way to look at it is that each pattern represents a few swings within a larger, or what I sometimes refer to as an "overall" trend relative to that specific pattern. So a good rule of thumb is to zoom out of the chart or jump up a couple timeframes and look to identify the encompassing trend line/channel. Even though the concept behind trend lines is simple, the most important thing is to stay very consistent in how they are drawn/defined. This is something I’m planning on writing a more in-depth article about to give it the detail it deserves, so keep an eye out. In the meantime, I hope this helps a bit.

redback

April 14, 2010 at 08:55 PM ET

Hi Rodger, thanks for the quick response on this subject, looking forward to future articles on this matter.

redback

April 19, 2010 at 11:34 PM ET

Hi Rodger, when calculating the time from AD to ideally equal XA of the gartley, do you include the time from BC in that calculation.

rstojsic

April 20, 2010 at 07:27 AM ET

yes. to clarify, the time (number of bars) from X to A vs. the time (number of bars) of the entire ABCD pattern (A to D). A more symmetrical, or roughly equal in time, pattern is better, but the number of bars of the entire ABCD pattern (A to D) may also fall within the 61.8%-1.618% range of the time (number of bars) it took XA to complete.

NeoFX

May 07, 2010 at 08:43 PM ET

hey Roger,

speaking of Gartleys:

if I'm not mistaken there's a decent one developing in the NZD/USD on 2hr chart; it's a bearish gartley with potential sell at .7200.
it's the 61.8% of down XA and the 127% of up ABCD (C hit the 78.6% so it should only rally as far up as .7200 or the 127% D up extension.

SELL NZD/USD @.7200 AND I'D EXIT @ .6900

let's see if I'm being a good student here lol

R

rstojsic

May 10, 2010 at 09:47 AM ET

yes, but the big gap up to completion was a good readson why we only saw a quick pullback to .7150

MoneyManager

May 08, 2010 at 04:55 AM ET

As much as I respect all the hard work that you guys put into this, I would like to see a results comparison between volatile and non-volatile markets. Granted, the definition might be difficult to agree on, but VIX would be a good starting point, perhaps either absolute value (not my preferred choice) or the slope (positive or negative) of some reasonably short MA. I realize that "compliance/regulatory" claims are being made to prevent this type of investigation. But I still haven't seen chapter and verse of *any* regulation (I am a registered principal, BTW) that would prevent this -- so perhaps it's a corporate issue, and do we want to go there? Frankly, I believe the methodology may have some value, but I also believe it has more value in some situations than others, and can in fact be a bad bet in certain situations.

I'm quite willing to work with you on this, and I'm quite qualified to do the research. But we need the back data, and 30 days is not going to do it. Why wouldn't GFT, or you, want to find out if your system could be improved? If you can cite chapter and verse of the legal regulation that prohibits you from presenting this information, I'll never say another word about it. Can you?

rstojsic

May 10, 2010 at 09:56 AM ET

whats preventing you from doing this yourself. i think your missing the entire point of this site and our intentions/goals. frankly i'm shocked you actually think i have not done, and currently continue to do this myself. not to mention that if our only goal was to make money with these free reccomendations why we would go out of our way to try and teach thiese patterns. i can go on and on, but the point is do the work yourself, validate your own conclusions and you'll learn somethiong invaluable along the way.

Semaj

May 08, 2010 at 08:38 AM ET

Einstein said "The simple answer is most often the correct answer" (something like that). For me the answer here is that this system is to subjective & complicated if there are so many questions week after week after week. Also following the "simple idea", if you have to fight too hard for an answer from a website for a reason they can't or wont post prior results then the answer should be obvious, learn to trade YOUR own system, take responsibility for YOUR trading decisions, and stop looking for the goose with the golden eggs, it doesn't exist ! What would all those do who follow the 360 trades do if for some reason(any reason) these trades could no longer be posted and you were trying to live off the markets, WHAT THEN ??? Just some thoughts :)

Semaj

May 08, 2010 at 08:57 AM ET

One more thought. See if 360 will post a percentage of trade setups that stay valid vs invalidated setups as a way to determine if these systems are worth the time investing looking for setups since they seem to be subjective & complicated for most. This should not be a legal or corp. compliance issue.

For those that this system works, good for you & congrats!!

converted

May 08, 2010 at 10:56 AM ET

Here's a novel thought for all the weirdos posting requests for full disclosure about this system..
YOU DON'T HAVE TO TAKE THE TRADES!!. I know, isn't that wonderful? you can go back to playing world of warcraft
or taking whatever chemicals you take that turn you into complete tools
The trade recomendations, all the info you're digesting is ALL FREE!! you're not paying a single penny for
them. There is no requirement on the part of these guys to post the results. Do your own homework!!

You are responsible for your own success! If your life is so bad, change it!!! that's right!!

I've never seen so many inane questions from supposedly intelligent people in my life.

THIS IS NOT A SYSTEM!! do you understand that?!! It is a tool. These guys are not giving you the fish, they've
gone one better and have given you the fishing rod.
This is a way of thinking, a way to conceptualize market movements through geometry.
The exact numbers of the convergences...they are guidelines. You need to sift through the markets
yourself to find which exact convergences work. You need to use this tool along with trend identification and
market timing to find the highest quality setups.

THERE IS NO HOLY GRAIL!! No amount of backtesting will prove this because IT IS NOT A SYSTEM.

MoneyManager

May 09, 2010 at 04:31 AM ET

converted, this is a system. It walks like a system and quacks like a system, therefor it is almost surely a system. You are right in that nobody has to take a single trade. I don't. So what?

naijafx

May 09, 2010 at 06:02 PM ET

I think MM is a losing trader whose psyche have been affected to the extent that he doesnt believe in trading fx as a profitable bizness

MoneyManager

May 09, 2010 at 09:49 PM ET

Hey, what do you know? ^_^ naijafx tries to improve the standards of this forum by opining:

"I think MM is a losing trader whose psyche have been affected to the extent that he doesnt believe in trading fx as a profitable bizness"

Did writing that make you feel like a big man, naijafx?

Did it make you feel like a tough guy? (naijafx spits on his hands, rubs them together, and thinks, "Man, I showed that punk how I handle people with opinions that I don't agree with.")

How do you feel now, naijafx? Has that "braying jackass" feeling set in yet? Wait for it. It will. ^_^

pipsaway

May 09, 2010 at 10:52 PM ET

He is clearly a losing trader, you can spot them a mile off. The guys who write with long words like they
are truly informed experts, when really all they've done is read a few books.

A "Money Manager" this guy is not. He has no real strategies for managing money, his only job is to disparage
other strategies and get extremely defensive at the drop of a hat.

Let's talk gartleys, I'd rather not waste more time on this guy

I make money with this method and it's taken me a bit less than 6 years converted ;=)
Yes, it's not a system it's a method, but it only takes market experience to realise this.
I only trade the 30M charts and avoid all major news announcements.

I also only trade 2 pairs and I know those markets pretty well so I have a fair
idea of high probability turning points at convergences.

When trading in this way you have to do an in depth top down analysis of the market at the start of the day
to see if your pair is indeed moving geometrically.

Remember this is all about probabilities. You only pick the best setups to stack the odds in your
favour

This means only picking the best convergences, ie where you get the biggest fib clusters, price AND time.
You need to look at more than just trend channels in my experience. However one thing this game has taught me..

nothing is wrong or right. Clearly there are some things that should be set in stone eg always have a plan..
However, everybody's experience of the market is different, so whatever makes money for you, that is it.

For me, it's about looking at more than just the things that these guys look at on FX360. However, look at their
results. As someone pointed out, even with a 38 odd % win rate you can still make money. But you know what, people
are just never happy. They look for something bigger, better. I'm happy making money whilst you do that ;=)

MoneyManager

May 10, 2010 at 02:23 AM ET

And as for you, pipsaway, you can't see anything from a mile off, much less my record, which has accumulated assets you can not yet even dream of. Kiss off, little man, you don't even bother me, let alone impress me.

MoneyManager

May 10, 2010 at 02:31 AM ET

And with that last swipe at something that calls itself pipsaway, but who I'd rather piss away, I take my leave of this forum. Sayounara folks. Some vocal minority here probably will never believe it, and I could give a flying you know what, but I came here to offer some experience. I'm rich as most of you dream of being, and I *do* know what I'm talking about. But the forum is filled with that vocal minority that makes ad hominem attacks instead of commenting with reason, and frankly, I have better things to do with my time than be insulted by people with 50,000 dollar accounts and less brains.

To those of you who appreciated my views, I apologize. But really, enough is enough, and who needs this? I don't, that's for sure. Am I opinionated? Sometimes, for sure. I can be gruff, and I can chaff. But until today, I have fought with ideas, not attacks on the man (well, mostly, I hope).

Good luck to most of you, to that vocal minority, kiss my butt.

FXDragon

May 10, 2010 at 03:27 AM ET

Hey come back here we're just having fun! I was just saying Sortino Ratio, R-squared, Jensen's Measure and Sharpe Rat. should compliment PE. We did our graduation project on it. I suggest reading academic articles on 'the modern portfolio theory'

MoneyManager

May 10, 2010 at 03:33 AM ET

Oh, but one more. A reprise, if you will. And oh, so deserving. ^_^

Hey, what do you know? ^_^ naijafx tries to improve the standards of this forum by opining:

"I think MM is a losing trader whose psyche have been affected to the extent that he doesnt believe in trading fx as a profitable bizness"

Did writing that make you feel like a big man, naijafx?

Did it make you feel like a tough guy? (naijafx spits on his hands, rubs them together, and thinks, "Man, I showed that punk how I handle people with opinions that I don't agree with.")

How do you feel now, naijafx? Has that "braying jackass" feeling set in yet? Wait for it. It will. ^_^

FXDragon

May 10, 2010 at 03:52 AM ET

People wanna hear what they can do, not what they can not do constantly in an agressive way. You should be prepared for wild criticisms when doing that.

naijafx

May 10, 2010 at 09:26 PM ET

ROFL

converted

May 09, 2010 at 12:45 PM ET

You write, talk, walk, quack,like a pompous idiot money manager, yet who knows, maybe you're not.
Maybe you have a couple of grandchildren that you dote upon, perhaps you toss them a couple of
werthers originals from the crackling hearth every once in a while, who knows.

However, you clearly do not make money from this. You're about 98 years old, still looking
for that elusive "system". But you don't have the balls to make any decisions, so you never will.
you'll spend all your time analysing and telling people why they can't make money.

I however do make good money from this "system". And it is not a system. It's taken the best part of 6 years
to enable me to make good returns. It is not a system because the best convergences are not objectively
identifiable for every market and time frame. Different pairs have different convergences and the true Ds are
formed at different times of the day, for different pairs for the highest quality setups that will work
about 70% of the time.

And there's the rub. YOU, not a computer have to select the highest quality setups, depending on trend position,
market timing, pattern, time, price. This article is a great start, but as a said before, it is a guideline,
and a blueprint for a fantastic tool.

Gartley did not specifiy exact convergences in his book though many technicians have distilled his views
into specific convergences. While these may work for some markets, and at some times, they won't at others

I don't write much on these forums, I have better things to do. And I know how much you love to get involved
in slanging matches - In which I have no interest, so I won't be answering any of your questions. I'm just
here to try to inform people better in a specific subject that I happen to have a bit of knowledge in. I know
little about fundamentals unlike you, and I get lost easily in other topics. However in this particlular
field, I know more than a little, though I am a diligent student and have much to learn.

MoneyManager

May 09, 2010 at 05:57 PM ET

converted, I guess pompous idiots are people who cannot debate issues without resorting to ad hominem. Pot, kettle, very black. Your resort to name-calling means, "Presto", discount the value of even reading beyond that point. Enjoy your anger.

margaret

May 10, 2010 at 04:58 AM ET

MM you have the opportunity to do good here. Once i thought that was a tennet that drove you. Share your wisdom, provide some leadership. Whats happening to you man. You've become pious (you'll probibly correct my spelling). I loved your posts but now they are one big yawn. Get over yourself and chill out. Bring something extra to the table, like you did in the past but not this sh*t. If your having a bad month then Im sending you alot of love because you NEED it!

FXDragon

May 10, 2010 at 06:44 AM ET

None of us has to prove anything to anybody. Lets just make insightful and respectful comments.

Big Weir

May 10, 2010 at 12:01 AM ET

Wow, talk about hot topics. I use Gartley's and many other harmonic paterns all the time to determine trade opportunaties and have found them to be a good TOOL, there are many factors that I look at when using these patterns such as a bullish gartly in a bulish trend I will trade differently to a bullish gartley in a bearish trend. I also use diffrent entry and limits to 360 as I have my own methods to trade these patterns.

I can say whilst some of the 360 trades I have liked and traded them and been successfull, I have also not traded certain set ups for my own reasons and this has saved me a few pips, I have also missed out on some good oportunaties for the same reason, so be it.

The point being that I am trying to make MM is it is not a one size fits all and if you don't like thats fine as you said you don't trade it. Do your own testing on a Demo account with real time opportunaties and see fit works for you and your personal style of trading rather than ask for somone elses statistics that you only have their word they are accurate.

If it doesn't suit you that's ok, you don't haveBut for me it works and thats all I am interested in.

rstojsic

May 10, 2010 at 10:01 AM ET

very well said. thank you.

Big Weir

May 10, 2010 at 06:52 PM ET

Your welcome Roger

codell

May 10, 2010 at 10:39 AM ET

This is a fantastic site, I never thought FX trading would be so entertaining. If MoneyManager is a pseudonym for one of you fx360 guys then what a stroke of genius. It keeps me coming back.

pipsaway

May 10, 2010 at 11:58 AM ET

Come on money manager come back, we got some good banter going here.
The piss away thing was pretty funny. But you've got to be prepared to take criticism where it's due. You're not
some fallen martyr get over yourself. A couple of my favourite Money Manager quotes...

"Granted, the definition might be difficult to agree on, but VIX would be a good starting point,
perhaps either absolute value (not my preferred choice).."

AND

"My friend Larry Williams (you may know him)"

Getting back to Gartleys, someone mentioned pattern recognition software. Ensign's is pretty good but the
main issue with recognition software is that it only recognises the pattern at the point it's complete, which isn't that
much good to you if you're trading shorter timeframes.
That's why you yourself need to train your eye to see these patterns well before they complete so you have your full
entry to exit strategy at hand in good time.

FXDragon

May 10, 2010 at 02:38 PM ET

My favorite MM humiliations:
"I've been trading successfully before you were born!" and
"No! You cant make any money!"
Gotta love him!

MHW

May 10, 2010 at 05:42 PM ET

Or how about this one from MM...

I'm not sure what I said to him to get this response,
but he responded to a comment of mine by saying he was
going to have to "fight fire with fire."

Keep up the bombast MM !

FXDragon

May 11, 2010 at 06:22 AM ET

I'm already making this a sticker for my car:
"I am rich as you can only dream of"

Salute,

FXDragon

May 11, 2010 at 06:27 AM ET

I got the patent this morning:)

Robin Hood

May 10, 2010 at 05:23 PM ET

I have taken some of these recommended pattern-recognition trades, in addition to the ones I took on my own analysis with different tools. I can say for my part, that I have learned a lot about the thinking behind patterns. Not all of the recommendations turned out as forecasted, but actually some of them did quite well. And nobody ever promised that this was safe heaven. Take it for what it is - trades to watch and join only if you feel like it. I have been watching more of them than I have traded. And over and over again the conclusion is that a great deal of them comes out close to the forecast. All together this is quite well as I see it. fI I felt like it, I could quite easily have drawn a track record by just watching the trades without participating them. Just for the purpose to decide whether I in the future would join them.

I am new to this forum as well as forex trading. The Gartley and butterfly patterns are new to me. But I have learned how to implement these patterns in my own toolbox, but even then I can say that just by following some of Rogers and Brads recommendations I have made several hundred pips. That is from February till now.

So to all of you guys: Read it. Study it. Try to understand it. When you think you do, trade it. It is - however - no rosegarden. You will still have to think on your own and work hard.

To harsh out like you do MoneyManager, is not very dignified. I think you owe Roger an apology. He is only trying to educate us. Dont ruin it.

Marvino

July 13, 2010 at 03:36 PM ET

Money Manager! Dude! pipe down! I'm tryin to listen!

FXDragon

July 13, 2010 at 05:32 PM ET

"I'm rich as most of you dream of being" Money Manager
:)) rtan 001

babybird

September 03, 2010 at 01:20 PM ET

I'm new to Forex trading (only started in June) and this is the very first comment I have made. I read all the articles and information by Roger, Brad, Boris and Kathy. I am learning every day and value and take on any information to improve my knowledge and understanding. One thing I learnt many years ago as a child was to have manners. I find the language and sheer rudeness by Money Manager completely intolerable, he shouldn't be allowed to comment on this site again (in my humble opinion). Roger deserves a big apology.

MHW

September 03, 2010 at 01:29 PM ET

By the way, where is the legendary Money Manager? Still kicking tires in Japan?

FXDragon

September 03, 2010 at 04:02 PM ET

"my record, which has accumulated assets you can not yet even dream of" Money Manager R.I.P.
salute!

tscoolberth

September 04, 2010 at 09:24 PM ET

Roger,
thanks for the work. I have heard much about Gartley and listen to Larry Peavento a bit. Interesting stuff.

chubi

September 06, 2010 at 10:11 AM ET

Well i want to thank everybody for contributing to this talkshow which is what i think it is. The real issue here is that we have not appreciated Roger and Brad enough for there time and effort. Remember they are doing this for freee. Rojer and Brad i say a big thank you to you both and everybody at FX360. That been said what is the projected profit targets on the setup.
Once again thanks Rojer thanks Brad and thanks FX360.
Chubi

rstojsic

September 08, 2010 at 06:30 AM ET

thanks, chubi. targets begin at retracements of CD.

m.colbert

March 16, 2011 at 09:05 PM ET

Rger, I was looking at the closed trade archives and added up back to November and it appears that you all are running a negative balance thus far. I understand that money management is the important factor, so I am not questioning your ability or trade methods. Rather, what do you all do when a slump like this occurs? I know that the last few month have been wild with the earth hating us but I would be interested to hear how your ideas change and thoughts are in a period of non-winning trades.

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