Advanced technical analysis
Let’s take a look at another pattern based on Fibonacci ratios. The bearish or bullish Gartley pattern is a useful one to know, offering insight of potential upcoming continuations.
- What is the Gartley pattern?
- How to find the Gartley Pattern
- How to trade the Gartley pattern
- Gartley pattern factsheet
What is the Gartley pattern?
The Gartley pattern is a bullish or bearish ABCD pattern page consisting of four consecutive price moves. When you spot a Gartley, it is usually a sign that a prevailing trend is about to continue.
Like the three-drive pattern, the Gartley pattern is a type of ABCD with an extra leg. However, with a Gartley the additional move comes in the form of a significant high or low before point A – usually referred to as point X. This move from X to A is the prevailing trend, which should continue when a Gartley completes.
The pattern gets its name from an early technical trader called H.M. Gartley, who first introduced it in his book Profits in the Stock Market. Gartleys don't only appear on stock charts, though. You can spot them on almost any market.
How to find the Gartley Pattern
To find a Gartley, you need to look for an initial trend that retraces in an ABCD pattern:
- In a bullish Gartley, the significant move is from X up to A, reverses at AB, resumes at BC then reverses again at CD
- Bearish Gartleys patterns are the opposite. A significant move from X down to A that reverses at AB, resumes at BC then retraces once more at CD
TIP - Bearish Gartleys look like an M, while bullish ones look like a W.
Like the other ABCD patterns we've looked at, you can confirm a Gartley by checking that the legs align with Fibonacci ratios.
- The entire move from A to D should be a 61.8% or 78.6% retracement of the original run from X to A
- BC should be a 61.8% or 78.6% retracement of AB
- CD should be 127.2% or 161.8% of AB
You'll also want to look for symmetry when confirming the Gartley pattern. Ideally, the time between X and A will be equal to the time between A and D.
Alternatively, the time period covered by the ABCD pattern could be a Fibonacci ratio of XA.
Gartleys can be harder to spot than Three Drives – but they are also much more common.
How to trade the Gartley pattern
A Gartley is usually a sign that the original trend from X to A is about to resume. When the pattern completes, the market should reverse once more at D, marking the end of the retracement.
In a bearish Gartley, you can trade this move by opening a sell position at D. If the pattern is bullish, open a buy position.
Gartley pattern factsheet
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