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Chapter 17, Part III - Gartley's Patterns. Page 9

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    While “222” is a continuation pattern in direction of initial X-A swing, Butterfly and Crab are reversal patterns and in general they are failed “222”, when AB-CD move comes beyond initial X-A swing. Let’s see, how they look theoretically:

    [​IMG]

    Now I suppose you see, that Butterfly looks very similar to “222” with only difference that the D point stands outside the X-A swing, but not inside it as with “222” pattern. Also I link X point with B and B point with D point so, that you can clearly understand why this pattern calls “Butterfly” – these two triangles resemble wings and the overall shape reminds us of a Butterfly.
    Pipruit: Sounds very poetic.​



    Commander in Pips: Right, but let’s put lyrics aside and speak about major issues of this pattern. Since Butterfly is a reversal pattern it’s also an extension one. As “222” as Butterfly patterns start similarly – initial swing and AB-CD retracement. But when we see that “222” has failed and the market moves beyond the X point – this could be start of Butterfly.
     
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