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**GARTLEY PATTERN**

Harold Gartley ran a stock market advisory firm in the 1930s that was one of the first advisory services to use technical chart analysis in its position trades. Gartley looked at stock market behavior in a way that revolutionized the way chart analysis is conducted and his research led to the development of what we now call harmonic trading. Gartley’s analysis did not actually use Fibonacci relationships to identify reversal points but the overall structure of Gartley’s patterns provided a basis for later traders to improve on his research and create higher probability trade setups.

Gartley’s trading structures, it was soon discovered, could be applied to any asset market and in the years since there have been many books, periodicals, trading applications and even new patterns that have been created. What this essentially means is that these patterns should not be viewed as static structures but instead as charting tools that can be researched and built upon.

**The Gartley Structure**

The Gartley pattern is a visually based geometric price pattern that uses both price and time to identify four consecutive price swings (a series of trend changes) that form structures that resemble “M” and “W” formations on a price chart. The “M” patters signal a bullish pattern is forming, where a “W” pattern signals a bearish pattern is forming. The overall structures relies on the development of an ABCD pattern (discussed previously) and this is preceded by a substantial price movement (the X point).

In practice, the Gartley pattern is a leading indicator that can help to forecast significant reversal points. Bearish patterns help to identify when short positions can be established of when long positions should be closed. In contrast, bullish Gartley patterns signal buy entries and closures in short positions.

The Gartley Pattern is one of the most traded harmonic patterns and can be applied to many markets and timeframes. It is a 5-point retracement structure that was originally outlined by H.M. Gartley and detailed further by Scott Carney. It has specific Fibonaccimeasurements for each point within its structure and it is important to note that D is not a point, but rather a zone in which price is likely to reverse, called the Potential Reversal Zone (PRZ). The B point retracement of the primary XA leg lies at 0.618 and the PRZ consists of 3 converging harmonic levels: 1) 0.786 retracement of the primary XA leg, 2) AB=CD pattern and 3) the BC projection is either 1.27 or 1.618.

The first target would be the 382 retracement of AD and the second target the 618 retracement of AD. A common stop level would be behind the X-point. Conservative traders may look for additional confirmation. Gartley Patterns can be bearish and bullish. TradingView has a smart XABCD Pattern drawing tool that allows users to visually identify 5-point reversal structures on a chart.

Gartley pattern- also known as 222 pattern, is the first original pattern created by H.M. Gartley which he described in his book. Gartley did not give it a name and hence for some time it had been called the 222 pattern after the page number of the book. There are 2 versions of the pattern bullish (looks like letter ‘M’) and bearish (looks like letter ‘W’). Below are the schematic pictures of the Bullish and Bearish Gartley patterns:

The first target would be the 382 retracement of AD and the second target the 618 retracement of AD. A common stop level would be behind the X-point. Conservative traders may look for additional confirmation. Gartley Patterns can be bearish and bullish. TradingView has a smart XABCD Pattern drawing tool that allows users to visually identify 5-point reversal structures on a chart.

Gartley pattern- also known as 222 pattern, is the first original pattern created by H.M. Gartley which he described in his book. Gartley did not give it a name and hence for some time it had been called the 222 pattern after the page number of the book. There are 2 versions of the pattern bullish (looks like letter ‘M’) and bearish (looks like letter ‘W’). Below are the schematic pictures of the Bullish and Bearish Gartley patterns:

The pattern starts with strong uptrend or downtrend which draws zigzag like corrective movements. The characteristics of a Gartley pattern to look at:

- X should exceed D.
- AB movement should be 0.618 retracement of XA.
- BC movement must be 0.382 or 0.886 retracement of AB.
- If the retracement BC 0.382, then the CD must move 1.272 of BC. Consequently, if BC is 0.886, then the CD should be 1.618 of BC.
- CD should be 0.786 retracement of XA

A

The Gartley pattern can be used in a variety of trading strategies, for example in intraday, position, or swing trades. Fibonacci retracements converge with Fibonacci extensions at the D point, which is the reversal level and trade entry. Ideally, the direction of X to A should match the direction of the larger trend. The move in total from A to D is representative of smaller correction within the larger trend. When the pattern develops on smaller time frames and matches the direction of the trend seen on larger time frames, probabilities are higher as well.

The Gartley pattern becomes valid when the reversal points (the X, A, B, C, and D points) will come at a significant high or low within the time frame. These price swings comprise a series of 4 pattern legs that are essentially miniature moves within the larger structure. In the pattern movement from A to D, price should retrace 61.8% or 78.6% of the move from X to A. Without a properly structured ABCD pattern within the ABCD move, the Gartly structure becomes invalid.

Additionally, the time duration from the X to A move should match the move from A to D, in both proportion and ratio. The time duration of the A to D move tends to be seen at 61.8% or 161.8% of the X to A move. In some cases, the ABCD structure will finish at the 100% measurement of the double top created by the X to A move. When this occurs, the time duration of X to A should also match the previous move. Instances of pattern failure occur when prices surpass the X point, and this indicates that a much stronger trend is actually in place. When this happens, prices are generally seen continuing to the 127.2% or 161.8% extension of the move from X to A.

Once upon a time, there was this insanely smart trader dude named Harold McKinley Gartley. He had a stock market advisory service in the mid-1930s with a huge following. This service was one of the first to apply scientific and statistical methods to analyze the stock market behavior. According to Gartley, he was finally able to solve two of the biggest problems of traders: what and when to buy. Soon enough, traders realized that these patterns could also be applied to other markets. Since then, various books, trading software, and other patterns (discussed below) have been made based on the Gartleys.

Gartley a.k.a. “222” PatternThe Gartley “222” pattern is named for the page number it is found on in H.M. Gartleys book,

A Gartley forms when the price action has been going on a recent uptrend (or downtrend) but has started to show signs of a correction. What makes the Gartley such a nice setup when it forms is the reversal points are a Fibonacci retracement and Fibonacci extension level. This gives a stronger indication that the pair may actually reverse. This pattern can be hard to spot and once you do, it can get confusing when you pop up all those Fibonacci tools. The key to avoiding all the confusion is to take things one step at a time. In any case, the pattern contains a bullish or bearish ABCD pattern, but is preceded by a point (X) that is beyond point D. The “perfect” Gartley pattern has the following characteristics:

**dditional Characteristics**The Gartley pattern can be used in a variety of trading strategies, for example in intraday, position, or swing trades. Fibonacci retracements converge with Fibonacci extensions at the D point, which is the reversal level and trade entry. Ideally, the direction of X to A should match the direction of the larger trend. The move in total from A to D is representative of smaller correction within the larger trend. When the pattern develops on smaller time frames and matches the direction of the trend seen on larger time frames, probabilities are higher as well.

**Pattern Calculations**The Gartley pattern becomes valid when the reversal points (the X, A, B, C, and D points) will come at a significant high or low within the time frame. These price swings comprise a series of 4 pattern legs that are essentially miniature moves within the larger structure. In the pattern movement from A to D, price should retrace 61.8% or 78.6% of the move from X to A. Without a properly structured ABCD pattern within the ABCD move, the Gartly structure becomes invalid.

Additionally, the time duration from the X to A move should match the move from A to D, in both proportion and ratio. The time duration of the A to D move tends to be seen at 61.8% or 161.8% of the X to A move. In some cases, the ABCD structure will finish at the 100% measurement of the double top created by the X to A move. When this occurs, the time duration of X to A should also match the previous move. Instances of pattern failure occur when prices surpass the X point, and this indicates that a much stronger trend is actually in place. When this happens, prices are generally seen continuing to the 127.2% or 161.8% extension of the move from X to A.

**Trading The Gartley Pattern**Once upon a time, there was this insanely smart trader dude named Harold McKinley Gartley. He had a stock market advisory service in the mid-1930s with a huge following. This service was one of the first to apply scientific and statistical methods to analyze the stock market behavior. According to Gartley, he was finally able to solve two of the biggest problems of traders: what and when to buy. Soon enough, traders realized that these patterns could also be applied to other markets. Since then, various books, trading software, and other patterns (discussed below) have been made based on the Gartleys.

Gartley a.k.a. “222” PatternThe Gartley “222” pattern is named for the page number it is found on in H.M. Gartleys book,

*Profits in the Stock Market*. Gartleys are patterns that include the basic ABCD pattern we’ve already talked about, but are preceded by a significant high or low. Now, these patterns normally form when a correction of the overall trend is taking place and look like ‘M’ (or ‘W’ for bearish patterns). These patterns are used to help traders find good entry points to jump in on the overall trend.A Gartley forms when the price action has been going on a recent uptrend (or downtrend) but has started to show signs of a correction. What makes the Gartley such a nice setup when it forms is the reversal points are a Fibonacci retracement and Fibonacci extension level. This gives a stronger indication that the pair may actually reverse. This pattern can be hard to spot and once you do, it can get confusing when you pop up all those Fibonacci tools. The key to avoiding all the confusion is to take things one step at a time. In any case, the pattern contains a bullish or bearish ABCD pattern, but is preceded by a point (X) that is beyond point D. The “perfect” Gartley pattern has the following characteristics:

- Move AB should be the .618 retracement of move XA.
- Move BC should be either .382 or .886 retracement of move AB.
- If the retracement of move BC is .382 of move AB, then CD should be 1.272 of move BC. Consquently, if move BC is .886 of move AB, then CD should extend 1.618 of move BC.
- Move CD should be .786 retracement of move XA