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Gartley Pattern - text
The Gartley pattern is named after H. M. Gartley who described the pattern in a book he wrote in 1935 called “Profits in the Stock Market”
In simple terms a Gartley pattern is a specifically shaped retracement.
It is used to spot potential turning points.
The specifically shaped retracement has 3 distinct parts generally referred to as waves.
The first part called the A wave is the beginning of the retracement
The second part called the B wave goes in the opposite direction of the first part
And the third part called the C wave goes in the same direction as the first part.
Here is a diagram to help you to visualize the Gartley pattern retracement shape.
This is a bullish Gartley setup and a potential buy trade near the bottom of the C wave.
Three key points about the gartley pattern
- The consensus among Gartley enthusiasts is that the B wave should retrace a minimum of 38.2% of the A wave and preferably 50% or more.
- The length of the C wave when all is said and done should be somewhere between 75% and 125% of the length of the A wave.
- To put together a specific trade strategy the trader must decide on the percentage retracement of the original move up he or she wishes to trade.
The most popular are 50%, 61.8%, and possibly 78.6% (our focus here is on the 78.6% retracements).
So what have you learned?
A Gartley pattern is a specifically shaped retracement.
It consist of waves A, B and C linked to Fibonacci retracement levels
It is best used to spot potential turning points and find profitable trading opportunities.