The Gartley - Harmonic Pattern

Harmonic Pattern – The Gartley



Harmonic Patterns enable traders to determine turning points with precision and high accuracy. In our introduction to Harmonic Patterns, we indicated that; all Harmonic patterns have five points – namely, “XABCD”.

Of the five points, the market always provides “XA” which is the impulse leg/move. Therefore the trader is required to identify the remaining points - “BCD”.

The Gartley pattern is the most commonly used harmonic pattern, and it was founded by an American ‘Harold McKinley Hartley’ (H.M. Hartley) in 1932. 

Like all Harmonic patterns, The Gartley is based on the Fibonacci retracement numbers, and it is used to help traders forecast/identify turning points on the market-trend chart. It is therefore a good indicator on when to enter or exit trades.

Using the Fibonacci tool, the Gartley pattern identifies BCD points by using the following measurement Criteria: -
>Point ‘B’ is 61.8 retracement of leg “XA”.
>Point ‘C’ is between 38.2 to 88.6 retracement of leg “AB”.
>Point ‘D’ is 78.6 retracement of leg “XA”. 


All harmonic Patterns complete at point "D", this is the ‘Potential Reversal Zone’ (PRZ).
For the Gartley Harmonic pattern, First Take Profit (TP) is at 38.2 and second TP is at 61.8. Stop Loss (ST) is set a few pips below (bullish) or above (bearish) "D". This is the case with all Harmonic patterns.

Before a decision to enter or exit a trade is taken, it is highly recommended that such a decision is supported by three or more other patterns/indicators (a Confluence of indicators thereof), these may include the usual candlestick reversal pattern, head and shoulders, double bottom, double top, flags, wages, triangles – etc. Price action analysis is another powerful approaching to analyzing the market.

As the most used Harmonic Pattern, The Gartley is a formidable tool that if used correctly can positively turn traders’ fortunes - in a big way.

OJ Mwale – Sani Global

Images: Courtesy of BabyPips & TradingStrategyGuides

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