All Trade Ideas and trading scenarios found on FX360.com are hypothetical. FX360.com has not placed these Ideas in a live trading environment. Forex Trading involves high risks, with the potential for substantial losses that exceed your initial deposit and is not suitable for all persons. Past performance is not necessarily indicative of futures results.
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 butterfly Pattern
What is it?
- Contains a bearish ABCD pattern preceded by a significant high (X)
- Convergence of Fibonacci extension ratios at point D
- Point D = Fibonacci extension of BC and XA
- Formed by two connecting triangles at point B, symmetry is key
- Pattern is found only at significant tops (highs) and bottoms (lows)
Why is it important?
- Convergence of Fibonacci extension ratios may provide higher probability for change in market direction
- May provide lower risk with the potential for higher reward
- Pattern failure may suggest a potentially strong bearish continuation may be in progress
Sounds good... So how do I find it?
Butterfly patterns are similar to Gartley patterns in that they resemble a “W” shape on a price chart. However, a butterfly pattern completes at the convergence of two separate Fibonacci extension levels (D is above X) whereas the Gartley completes at the convergence of a Fibonacci retracement and extension (D is below X). The symmetry between the two connecting triangles at point B is one of the keys to this pattern.
The bearish butterfly Pattern Rules
- The swing from A to D is a 127.2% or 161.8% extension of XA
- A valid ABCD must be observed in the extension move (AD)
- Additional confirmation may be attained when the times of the XAB and BCD triangles are in proportion
- A move beyond 161.8% negates the pattern and may suggest a potentially strong bullish continuation
Example 1: EUR/GBP, 15 min
Example 2: USD/JPY, 1 hr
The information, including Commentary and Trade Ideas, provided on FX360.com should
not be relied upon as a substitute for extensive independent research which should
be performed before making your investment decisions. GFT Global Markets UK Ltd. (“GFT Markets”) and FX360.com
is merely providing this information for your general information. The information
and opinions presented do not take into account any particular individual’s investment
objectives, financial situation, or needs. All investors should obtain advice based
on their unique situation before making any investment decision and should tailor
the trade size and leverage of their trading to their personal risk appetite. Any
projections or views of the market provided by FX360.com may not prove to be accurate.
The views of the authors and analysts are not necessarily those of GFT
Markets, its owners, officers, agents or other employees. FX360.com and the currency
research team will not be responsible for any losses incurred on investments made
by readers and clients as a result of any information contained on FX360.com. GFT
Markets and the currency research team do not render investment, legal, accounting,
tax, or other professional advice. If investment, legal, tax, or other expert assistance
is required, the services of a competent professional should be sought.