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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 675.24-1.2%Nov 4 4:00 PM EST
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To: GROUND ZERO™ who wrote (117803)12/28/2018 7:38:13 PM
From: Qone02 Recommendations

Recommended By
kimberley
Machaon

  Read Replies (9) of 218393
 
Yes, in that time frame. Time frame determines trend. I'm just starting to study the Gartley pattern in these smaller time frames. It's a work in progress. The ABCD thunderbolts I have pretty much down. The Gartley is the keeper of the trend. This pattern can and will fail, at some point the trend will change.

Here's a little history of the pattern.

Larry Pesavento took Gartley’s original work to a new level. Because of him, the Gartley 222 pattern became a well-known harmonic pattern today.

The “Gartley 222” method as described by Pesavento derives its name from the page no. 222 from the original Harold’s Gartley’s book.





Here are some traits of this method:

Three out of four trades end up in profit. Risk-reward ratio is bigger than 1:4 Traders end up riding a trend, not picking up a top or a bottomPesavento developed the following rules for it:

75% of the time, the move from A will terminate at D at around 61.8%-78.6% retracement of XA distance. 25% of the time end of D will be at 38.2%, 50% or 70.7% of the XA distance AB=CD BC= 61.8%*AB or 78.6%*AB On top of these, Pesavento found that sometimes the AB=CD rule gives a price target that stretches beyond point X. When this happens, the move will further continue in the same direction.

Moreover, when the AB=CD gives a price target around the X point, a double or a triple pattern forms most of the times.

While the Pesavento approach is clearly a step forward to harmonic trading, it was not enough. It still leaves a lot of room for interpretation.

Carney was a student of Pesavento. He didn’t like to leave to many possibilities for the retracement levels, so he worked on finding a better approach.

Carney’s approach to harmonic trading was made public at the turn of the century. His approach uses specific Fibonacci ratios between the Pesavento’s Gartley 222 pattern.

For example:

B=61.8% of XA BC<161.8% AB=CDThis is the base for modern harmonic trading. Bullish butterflies, bearish bats or crabs, and so on…the very definition of these patterns derives from Carney’s approach to the original Gartley pattern.
colibritrader.com
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