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Our team of analysts uses these popular Fibonacci patterns to identify trend continuations and reversals, as well as find potential market entry and exit points. Click on each image below to read a description of each pattern and to learn how you can use it for discovering new trading opportunities.
You can view two groups of Fibonacci patterns, bearish (down) and bullish (up). Simply click on the name to switch between the two groups.
The bearish Gartley Pattern
What is it?
- A visual, geometric price/time pattern comprised of four consecutive price swings, or trends—it looks like a “W” on price chart
- Contains a bearish ABCD pattern preceded by a significant high (X)
- A leading indicator that may help determine where and/or when to enter a short (sell) position, or exit a long (buy) position
- First introduced in 1935 by trader H.M. Gartley in his book, Profits in the Stock Market
Why is it important?
- May help identify potentially higher-probability selling opportunities in nearly any market and in nearly any timeframe (intraday, swing, position)
- Reflects the convergence of a Fibonacci retracement and extension levels at point D, suggesting a potentially stronger level of resistance, thus higher probability for market reversal
- X to A ideally moves in the direction of the overall trend. The move from A to D typically indicates a short-term correction of the established downtrend
- May provide a more favorable risk vs. reward ratio, especially when trading with the overall trend
Sounds good... So how do I find it?
For this pattern to be valid, each turning point (X, A, B, C, and D) should represent a significant high or significant low on a price chart. These turning points define the four consecutive price swings, or trends, which make up each of the four pattern “legs.”
Source: GFT
The bearish Gartley Pattern Rules
- Swing from A to D ideally will be a 61.8% or 78.6% retracement of XA
- Note: A valid ABCD pattern must be observed in the move from A to D
- Ideally, the time from point XA and AD should be in ratio and proportion
- Time of AD is typically between 61.8% – 161.8% of XA
- In limited instances, the ABCD move may complete at 100% of XA (double top)
- In this case, the time of XA and AD should be equal for a “true” double
- Pattern failure (e.g., the price moves beyond point X) indicates a potentially strong bearish continuation may be in progress
- In this case, the price may move up to at least 127.2% or 161.8% of XA
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Example 1: USD/CAD, 15 min
Source: GFT
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Example 2: USD/CAD, Daily
Source: GFT
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Example 3: USD/JPY, 30 min
Source: GFT
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Example 4: GBP/USD, 30 min
Source: GFT
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