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Chapter 17, Part III - Gartley's Patterns. Page 15

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

    Aug 28, 2009
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    Approach to second target could be twofold.

    1. Use any other Fib retracement level of the AD swing or ultimate target of Butterfly. Here we can see that all of them have been reached after some time. The major clue here is the nature of this market move. We can see that right to 0.618 Fib support level market shows thrusting black candles, telling us that move could continue. But then, this aggressive move is from time to time was interrupted by retracements. In such environment, it looks logical to take profit around 0.786 – 1.0 level of A-D move. Although, as we see – market has reached 1.272 and shown solid pullback, then finally reached 1.618. But it is very difficult to see it in advance.

    2. Use support levels of larger swing as potential targets – take a look at chart #8:

    Chart #8 | EUR/USD 4-hour Butterfly “Sell” at daily chart

    Here is how our Butterfly looks on daily time frame. See – 0.382 and 0.618 support levels from larger swing on daily time frame could be used as potential targets. Besides, they stay very close to ultimate targets of Butterfly.

    Choosing the targets is more an art rather than straight algorithm. In the beginning you will take retracements from AD swing, but later when your experience will become greater, you will be able to recognize what extended target to choose, depending on nature and strength on move.

    Pipruit: I see. Thanks Commander. This lesson was very interesting and useful. I’ll go home and try to find some Butterflies.

    Commander in Pips: Don’t forget your butterfly net. And here is nice example of 1.27 Butterfly “Buy” as a parting gift, since we didn’t talk about it:

    Chart #9 | EUR/USD Daily Butterfly “Buy”DMA

    And another one on monthly USD/CHF that is not finished yet:

    Here is by the way a perfect example, how general Butterfly target at 1.618 coincides with 1.618 Fib expansion target of inner AB=CD. See – both target (green and blue lines at the bottom) stand in very tight range.

    Chart #10 | USD/CHF Monthly potential Butterfly “Buy”

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 12, 2016
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