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Gartleys -- All X5 Patterns

H.M. Gartley wrote about a 5-point “Gartley” trading pattern in his book, "Profits in the Stock Market." Gartley (all 5-point) patterns are little complex patterns but have high rates of reliability when traded with market context. Gartley patterns also other variations with various retracement/extension ratios called Butterflys, Bats, Crabs etc. They all have an integral ABCD pattern embedded in them and have different detection and trading rules. A word of caution with Gartley trading.. Most Gartley (all X5 patterns) are considered reversal patterns and its trading is counter-trend trading. Traders must confirm a trend reversal before considering trades.

Gartley patterns have five points starting at point X, which is the lowest of all points in a bullish setup and the highest of all points in a bearish setup. For bullish Gartley, from X, prices rise to form a higher swing-high at “A”. From A, a retracement swing low “B” is formed within 0.382 to 0.618 of XA range. Another swing high “C” is formed at 0.618 of AB. Point “D” is formed in Potential Reversal Zone (PRZ) within 0.618 to 0.786 of XA swing, or 1.27 to 1.62 of BC range. D is the decision or buy trade point in bullish “Gartley” setup. Point D is also a sell trade point in a bearish “Gartley” setup.

How to Trade

Gartleys (All X5 Patterns)

Trading patterns must have two key components: 1. Pattern Integrity and 2. Market Context. Patterns must be properly constructed and uniformly formed before a trade is considered. Patterns must agree with market conditions and market context tools. Also patterns must meet its key trading rules for successful execution and successful trading.

Trade:
Once Gartley (all X5) patterns achieved its pattern structure and completed at PRZ level, traders must look for confirmation of trend reversals. Usually these reversals occur with higher-high bars or wide-range bars. Enter one tick above the high of the confirmation bar (for bullish). Place a “stop” order below (bullish) the low of the X5 patterns. Targets are set at 62% to 79% of AD levels.

Trade Examples

FULL Disclaimer/Terms & Conditions

DISCLAIMER: THE RISK OF LOSS IN INVESTING STOCKS, FUTURES, OPTIONS, FOREX OR COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH INVESTMENTS ARE SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION, YOUR INVESTMENT EXPERIENCE AND OBJECTIVES, FINANCIAL RESOURCES AND OTHER RELEVANT CIRCUMSTANCES. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS, AND LOSSES ARE ALWAYS POSSIBLE. THE STRATEGIES OR TRADE SETUPS MENTIONED HEREIN SHOULD NOT BE CONSTRUED AS CONSERVATIVE STRATEGIES BUT RATHER SPECULATIVE AND FOR SHORT-TERM TRADING PURPOSES ONLY. THERE IS EQUAL OR GREATER POTENTIAL FOR LOSS WHILE USING THIS STRATEGY AND TRADE SETUPS.

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