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Harmonic Trading 104 (The Butterfly Pattern )
Posted 12-08-2010 at 08:11 AM by larryfolson
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Updated 12-08-2010 at 08:35 AM by larryfolson (up dated with an Ideal1.27 bull butterfly)
Updated 12-08-2010 at 08:35 AM by larryfolson (up dated with an Ideal1.27 bull butterfly)
As we begin to learn about the Butterfly Pattern.
I would like to say that it is not easy. And will take some time to fully comprehend the various Fibonacci rations that makes up each Harmonic pattern.*
If you are an average Joe trader such as myself. I suggest that you find a good Harmonics indicator to help with identifying these patterns in the live market. (And connect with more experienced Harmonic traders to help you on your journey.)*
Never trade with out a stop and use good money management.
So Lets Get Started!!!!
The Butterfly Pattern
The Butterfly is considered a reversal pattern. Especially when found at significant tops (Highs) and Bottoms (Lows)
An ideal Butterfly Pattern, has a Fibonacci ratio of a 0.786 retracement of the XA leg as the B point.
That forms an AB=CD pattern of an extended C.D. leg that is 1.27 or 1.618 of the AB leg.
D. will be below X. in a Bullish Butterfly and D. will be above X. in a Bearish Butterfly.
D. is the Bread and Butter point and projection level with the greatest profit potential if the pattern holds true.* Especially when found at significant tops (Highs) and Bottoms (Lows).
GFT-Butterfly-Bullish.pdf
GFT-Butterfly-Bearish.pdf
Reference sources used
http://tradingarsenal.com/
http://harmonictrader.com/price_patterns.htm
http://www.fx360.com/techAnalysis/ch...d-pattern.aspx
I would like to say that it is not easy. And will take some time to fully comprehend the various Fibonacci rations that makes up each Harmonic pattern.*
If you are an average Joe trader such as myself. I suggest that you find a good Harmonics indicator to help with identifying these patterns in the live market. (And connect with more experienced Harmonic traders to help you on your journey.)*
Never trade with out a stop and use good money management.
So Lets Get Started!!!!
The Butterfly Pattern
The Butterfly is considered a reversal pattern. Especially when found at significant tops (Highs) and Bottoms (Lows)
An ideal Butterfly Pattern, has a Fibonacci ratio of a 0.786 retracement of the XA leg as the B point.
That forms an AB=CD pattern of an extended C.D. leg that is 1.27 or 1.618 of the AB leg.
D. will be below X. in a Bullish Butterfly and D. will be above X. in a Bearish Butterfly.
D. is the Bread and Butter point and projection level with the greatest profit potential if the pattern holds true.* Especially when found at significant tops (Highs) and Bottoms (Lows).
GFT-Butterfly-Bullish.pdf
GFT-Butterfly-Bearish.pdf
Reference sources used
http://tradingarsenal.com/
http://harmonictrader.com/price_patterns.htm
http://www.fx360.com/techAnalysis/ch...d-pattern.aspx
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great stuff, larry!
we don't have much on gartley/butterfly here, and it is a rich topic, so this fills a void. 
Posted 12-08-2010 at 09:48 AM by Simit Patel
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Thanks Simit,
I plan On doing a 200 level series on proper trade entry and price action conformation.Posted 12-08-2010 at 10:09 AM by larryfolson 
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