How To Trade Gartley Pattern
Usually, most Fibonacci patterns traders wait until the Gartley pattern is completed at the point D before they will try to sell or buy.
A bearish Gartley pattern is in place after a bullish trend.
A bullish Gartley pattern is in place after a bearish trend.
A valid Gartley pattern on the monthly chart of Walgreens Boots Alliance Inc stock (WBA NASDAQ-100) is formed between 2009 and 2011. AB is at 61.8% 0f XA.
BC is between 38.2% and 88.6% 0f AB. CD stopped exactly at 78.6% 0f XA.
A reversal occurred at the point D. Note that XA did not cancel the prior bullish trend or impulse wave.
This an example of a distorted Gartley pattern because in this case XA is a total retracement of the prior bullish trend. It has cancelled the trend. In that case one must be cautious or put a question mark on the development of the Fibonacci pattern. Apart from that anomaly, every else was spot on.
AB is at the 61.8% of XA (correction). BC is between 38.2% and 88,6% 0f AB.
Finally, CD stopped exactly at 78.6% Fibonacci retracement of XA.
The icing on the cake is the reversal that occurred at the possible reversal point D.
Be aware that the price does not have to reverse at 78.6% all the time. Draw a warning line at the point D, and give priority to bullish trading signal above D and bearish one below. In very instance, one must use a top-down trading method to avoid trading like an old fashioned Fibonacci patterns trader. It is stupid to just sell at the point D hoping that it one's lucky day.
The financial instrument in question here is Goldman Sachs Group Inc (GS Dow 30) monthly chart.
A Gartley pattern with a big question mark on it is being formed between 2009 and 2015.
One could have sold it at points B and D and also take bullish positions at C when it was still underway.
Now, you understand why technical day and swing traders love Gartley and other Fibonacci patterns. The key is to identify a valid Gartley pattern then breath in and out, before using a different times frame trading method to take the trade like a pro. If the pattern is not neat, one must trade it prudently.