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Trading Strategy with Gartley Fibonacci Patterns

monarchcb.com - Using the Fibonacci method which is popular, fantastic and common, this trading method with the Gartley pattern can be a fairly careful entry strategy to look for opportunities from price retrogression.

In trading, whether stocks, forex, commodities, or futures, market players are faced with a variety of procedures that can be used to make profits. Which one is appropriate, of course, is related to the related personality and this is not a right or wrong question. Well, this post will discuss trading strategies with the Fibonacci Gartley harmonic pattern or in a short way often called the Gartley Chart.

Gartley's Fibonacci Interpretation

The Fibonacci Gartley was first published by a smart trader named Harold McKinley Gartley in 1935 in his book "Profits in the Stock Market", most notably on page 222. This pattern is usually associated with a lethargic mood in the market which then faces a retrogression of the ideals( reversal).

Technically, Gartley is an alteration of the Fibonacci Retracement which implies a price retrogression with the call of the line approaching the Meter graph when it is bullish or the W graph when it is bearish. The top and bottom on the first ax are always more "pointer" than the second ax. Please note that each leg (leg line) has its own criteria, whose appearance on the chart is often difficult to detect due to the large amount of noise in the market.

Follow this next depiction:

The streak proves that there is an elongated gain between buyers and sellers which continues to weaken (converge) and is likely to end in a reversal in which one of the parties succeeds in leading the market. In the Bullish Gartley, consumers will lead the market after the free trade is pressured by traders. On the other hand, Bearish Gartley implies a reversal from bears after being pressed by bulls.

Line Extraction Method and Signal Quality

Next is an illustration of Bullish Gartley's innocent invitation painting:

Each leg (call line) has its own criteria with the usual determination in the form of Fibonacci Retracement, namely:

  • The XA leg is drawn from the lowest price of a timeframe to the nearest high. XA is always the first and longest leg.
  • AB leg is pulled from the high of the first leg to the next low. AB is the retracement (ideally) 61.8 of Leg XA.
  • The BC leg is the retracement between 38.2 to 88.6 of AB. The high of the BC leg on the Bullish Gartley could not exceed the high of the AB leg. Likewise the low on the Bearish Gartley.
  • Leg CD is facing the 78.6 retracement of leg XA. The low leg of the CD cannot be smaller than the foot of the XA.

The accuracy of Gartley's Fibonacci pattern markings will be better if the legs AB and CD meet the standard markings of the AB = CD pattern. But considering the dynamics of the market situation, signs of a perfect reversal of the pattern are very difficult to find. Theoretically, it can be noted that the best sign is on the very far right of the last Fibonacci pattern. This is because a bullish reversal situation has been created there.

Entry and Exit with Fibonacci Gartley Signs

The signs of the Fibonacci pattern are quite accurate if all the legs have really met the requirements. Therefore, stay away from the markings of the patterns with forced foot benchmarks.

The entry position is usually located a few pips from the position of point D as the last leg. Traders are advised to use pending instructions so that positions are executed only when the price movement has actually held the limit line or stop instructions. If you use market instructions (so you don't miss the moment), then confirm the buy or sell sign until the price moves a few pips from point D.

The stop loss position is placed a few pips from the early leg X assuming the XA leg is a representation of the highest volatility in the initial timeframe. In other words, if the price is free to move past point X, so it is better to take a cut loss than to risk holding the position any longer.

A Meaningful Guide When Trading with Gartley's Fibonacci Patterns

  • The Gartley Chart trading method that has been around for almost 9 decades is still relevant today, remembering Fibonacci itself is a symptom of harmony that is eternal in nature and will not be worn down by time. That is, there is no need for confusion about this pattern to be left behind in the midst of the millennial era with various types of digital heritage that have emerged.
  • The Gartley Chart's track record is fairly normal due to its ability to learn the conditions that most traders worry about entering the market. Meanwhile, therein lies the opportunity for those who are brave but always calculating.
  • Although legal on all time frames, to avoid noise and improve the accuracy of harmonic patterns, traders are recommended to use H4 and above time frames.
  • Understand the comparison of retracements and reversals. Although along with the price retrogression, there are some comparisons between the two. Retrogression of ideals or any reversal is usually helped by a solid trading load. In other words, retracement is generally not aided by load capacity. From the price action point of view, reversals are usually signaled by the appearance of a price retrogression candle, while retracements are often signaled by candles whose top and bottom are similarly far away or spinning maximum.
  • Apart from some of the advantages of Gartley's Fibonacci, this method also has a weakness, it is quite complex and requires guidance in order to identify patterns well. Not only that, many traders are not very fond of the Gartley chart because of its individual character. What trader A calls pattern X may be mistaken for pattern Y by trader B, and vice versa. This subjectivity sometimes creates doubts and increases intellectual weight for traders who use it.