Gartley
The Gartley is a harmonic pattern using specific Fibonacci ratios to identify potential reversal zones, first described by H.M. Gartley in 1935.
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How to Identify
Identify the XA leg, the initial impulse move
The AB leg retraces 61.8% of XA
The BC leg retraces 38.2% to 88.6% of AB
The CD leg extends 127.2% to 161.8% of BC and retraces 78.6% of XA
Point D is the potential reversal zone where you look for entry
Trading Rules
Entry Rules
- Enter at point D when price reaches the 78.6% retracement of XA
- Confirm with a bullish or bearish candle reversal signal at point D
- Use limit orders at the D point level for automatic entry
- Verify the Fibonacci ratios are within acceptable ranges before entering
Exit Rules
- Place stop-loss beyond the X point level
- Target the 38.2% retracement of the AD leg as the first target
- Target the 61.8% retracement of the AD leg as the second target
First target: 38.2% retracement of the AD leg. Second target: 61.8% retracement of the AD leg. Extended target: the A point level.
Place stop-loss beyond the X point with a small buffer. If price moves beyond X, the pattern is invalidated.
Journaling Tips
Record the exact Fibonacci ratios at each point to assess pattern accuracy
Note the timeframe and whether higher-timeframe Gartleys are more reliable for you
Track your hit rate at each target level to optimize your exit strategy
Log the reversal candle at point D and rate its quality
The Gartley pattern, originally described by H.M. Gartley in his 1935 book “Profits in the Stock Market,” is a harmonic pattern that uses Fibonacci ratios to identify potential reversal zones with precision.
Harmonic Trading Basics
Harmonic patterns differ from traditional chart patterns in a fundamental way. Instead of relying on visual shapes, they use specific Fibonacci ratios between price swings to identify high-probability reversal zones.
The Gartley is the foundation of harmonic trading. Understanding it well provides the basis for learning the Butterfly, Bat, and other harmonic patterns.
The XABCD Structure
Every Gartley pattern has five points creating four distinct price swings:
- XA: The initial impulse move
- AB: The first retracement (61.8% of XA)
- BC: A move in the XA direction (38.2-88.6% of AB)
- CD: The final move that completes the pattern at D
Point D is the potential reversal zone (PRZ) where you look for trading opportunities.
The 78.6% Key
The defining ratio of the Gartley is the 78.6% XA retracement at point D. This specific Fibonacci level distinguishes the Gartley from other harmonic patterns:
- Bat pattern uses 88.6% XA retracement
- Butterfly pattern uses an extension beyond X
When price reaches the 78.6% level with the other ratios in alignment, you have a valid Gartley setup.
Trading the Pattern
Identification: Use Fibonacci tools to measure each leg. All ratios must fall within acceptable ranges. If any ratio is significantly off, the pattern is not a valid Gartley.
Entry: Place a limit order at the D point (78.6% XA retracement). Alternatively, wait for price to reach D and show a reversal candle before entering.
Risk management: Stop-loss goes beyond the X point. If price exceeds X, the pattern has failed and you exit.
Targets: Use the AD leg Fibonacci retracements for targets. The 38.2% level is conservative, the 61.8% level is standard, and the A level is aggressive.
Journal Integration
Harmonic patterns demand precise record-keeping. Record the exact Fibonacci ratios at each point, the quality of the reversal at D, and which target levels were reached. This data helps you refine your ratio tolerances and improve pattern identification over time.
Common Mistakes
Forcing Fibonacci ratios to fit when the pattern does not meet exact criteria
Not waiting for a reversal signal at point D and entering blindly at the Fibonacci level
Using stops that are too tight beyond the D point instead of beyond X
Frequently Asked Questions
What Fibonacci ratios define a Gartley pattern?
The key ratios are: AB retraces 61.8% of XA, BC retraces 38.2-88.6% of AB, CD extends 127.2-161.8% of BC, and D completes at the 78.6% retracement of XA. The 78.6% XA retracement at D is the defining characteristic.
Is the Gartley pattern bullish or bearish?
The Gartley can be both. A bullish Gartley starts with a downward XA leg and offers a long entry at D. A bearish Gartley starts with an upward XA leg and offers a short entry at D.
How accurate are Gartley patterns?
When all Fibonacci ratios align precisely and a reversal candle confirms at point D, Gartley patterns can be quite reliable. However, accuracy depends heavily on the trader's ability to correctly identify the pattern and wait for confirmation.
Start Tracking Your Patterns
Journal every pattern trade to discover which setups actually work for you.
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