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Chapter 17, Part III - Gartley's Patterns. Page 8

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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    Gartley Butterfly and Crab


    Commander in Pips: Although our primary object here is the Butterfly pattern, we will say a couple of words about the Crab first. Crab is the same sub-case of Butterfly as Bat is a sub-case of the “222” pattern. So, Crab and Butterfly are the same pattern, with only difference that Crab has some specific demand for retracement/extensions parameters, and if you see that these parameters are accomplished, then you call it Crab instead of Butterfly. Still if you call Crab as Butterfly – you always will not be wrong. We’re speaking about that again only for clarification, so that you will not be surprised with the unknown when you see or hear somewhere Crab name of harmonic pattern.

    Butterfly pattern is rightly seen as favorite reversal pattern among most traders, because particularly this pattern very often forms at a top or bottom. Trading Butterfly can get you an opportunity to enter right at the extreme. Sometimes the market could form Butterfly at different time frames that point on the same target level. And you can see this pattern in any market and on any timeframe as with other harmonic pattern. Trading Butterfly gives you excellent risk/reward ratio, but as with any pattern in could fail, so using stop-loss order is must here as well. Concerning Butterfly there is a proverb that exists: “If Butterfly works – it works perfectly, but if it fails – it fails miserably”. This is based on the quality of Butterfly. The point is if this pattern works – it precisely shows reversal point, so that market reverses almost at theoretical target of butterfly. But if it fails and market goes beyond its target – then this move could be very significant. This is also gives excellent possibilities sometimes.
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