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Chapter 17, Part III - Gartley's Patterns. Page 4

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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    Pipruit: And what Fib retracement levels could reach AB=CD pattern inside “222”?​
    Commander in Pips: Oh, yes, I’ve not told you that:

    1. All the same numbers for retracement: 0.382; 0.5; 0.618; 0.786, maybe 0.88 and 1.0. This is for depth of AB-CD move inside X-A swing;

    2. Speaking about AB-CD itself - apply all rules that we’ve noted in the previous part. The only limitation – the D point has to be inside X-A and can’t exceed the X point. Say, if the CD leg is some extension of AB (1.27; 1.618…) watch it.

    At the end of this brief discussion we make a description of so-called “perfect” “222” pattern:

    1. Move AB should be 0.618 of XA;

    2. Move BC should be 0.382 or 0.886 of AB;

    3. If BC is 0.382 of AB, then CD should be 1.272 of AB. If BC is 0.886 of AB, then CD should be 1.618 of AB.

    4. Move CD should reach 0.786 of XA.

    But as you understand a “perfect” pattern could be met only very rarely.

    Trading Gartley “222” pattern

    Ok let’s start from an example directly, since we’ve studied all of the “222” properties. On chart #1 we can clearly see this pattern – the initial X-A swing down and AB-CD retracement. Here the AB move has reached the 0.5 level and the AD move – almost 0.786. Also take a look that AB=CD is rather harmonic, so that AB equals CD.

    To enter the market due harmonic patterns you may act differently. You may enter, say, blindly – just around the target of AB-CD at 1.4325-1.4330. But here you have to be sure that the CD leg will not be extended compared to AB. Existence of Agreement could give you more confidence with that, but this is not the case in our example. I do not want to say that this method is bad – sometimes you may even get excellent entry points, but another one exists also.
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 12, 2016
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