Harmonic Pattern: Bearish Gartley
The Gartley is probably the most well-known pattern in Gartley Harmonics. Gartley himself said that this pattern represents one of the best trading opportunities. Its profitability remains exceptionally resilient. This is especially true when we consider how old the pattern is and how it has remained profitable in these contemporary trading environments. Pesavento reported (at least I think he was the one who wrote this statistic) that it is profitable seven out of ten times and has remained that way for over 80 years. It is important to remember that all harmonic patterns have stringent ruleset. There is no room for interpretation in the construction of any pattern, and the Gartley pattern is no different.
Rules
- D cannot exceed X.
- C cannot exceed A.
- B cannot exceed X.
Characteristics
- X is the high or low of a swing.
- It is impossible to project or determine A.
- Main Fibonacci levels are 38.2%, 50%, 61.8% and 78.6%.
- Precise 61.7% retracement XA for B.
- BC projections have two specific Fibs: 127% or 161.8%.
- The BC projection must not exceed 161.8%.
- Symmetrical AB=CD patterns are frequent.
- C retracement has a wide range between 38.2% and 88.6%.
- An exact D retracement is 78.6% of the XA move.
Sources: Carney, S. M. (2010). Harmonic trading. Upper Saddle River, NJ: Financial Times/Prentice Hall Gartley, H. M. (2008). Profits in the stock market. Pomeroy, WA: Lambert-Gann Pesavento, L., & Jouflas, L. (2008). Trade what you see: how to profit from pattern recognition. Hoboken: Wiley
