Gartley Pattern

What Is the Gartley Pattern?

The Gartley pattern is a harmonic trading pattern first described by H.M. Gartley in 1935 and later refined with Fibonacci ratios by Scott Carney. It uses specific mathematical relationships between four price swings to identify high-probability reversal zones.

The pattern consists of five points — X, A, B, C, D — connected by four price swings. When these swings align with specific Fibonacci ratios, point D becomes a Potential Reversal Zone (PRZ) where the trade is entered.

What makes the Gartley valuable is its precision. Unlike subjective chart patterns where two traders might disagree on what they see, the Gartley is defined by exact Fibonacci ratios. Either the ratios align or they do not. This objectivity makes it ideal for systematic journaling and performance tracking.

A bullish Gartley forms a W-shape and signals an upward reversal at point D. A bearish Gartley forms an M-shape and signals a downward reversal at point D.

How to Identify the Gartley

The XABCD Structure

The Gartley builds through five sequential points:

1. X to A: The initial impulse move — the starting leg
2. A to B: A retracement of XA. Must retrace exactly 61.8% of XA. This is the Gartley’s signature ratio
3. B to C: A retracement of AB. Can range from 38.2% to 88.6% of AB
4. C to D: The final leg that completes the pattern. CD extends to the 127.2% to 161.8% extension of BC
5. Point D: The completion point, which must land at the 78.6% retracement of XA — this is the PRZ

The Critical Fibonacci Ratios

Leg	Required Fibonacci Ratio
AB	61.8% retracement of XA
BC	38.2% to 88.6% retracement of AB
CD	127.2% to 161.8% extension of BC
D	78.6% retracement of XA

The two non-negotiable ratios are:

• AB at 61.8% of XA — this defines the Gartley versus other harmonic patterns
• D at 78.6% of XA — this defines the entry zone

The Potential Reversal Zone (PRZ)

The PRZ at point D is where multiple Fibonacci levels converge:

• The 78.6% retracement of XA
• The 127.2% to 161.8% extension of BC

When these levels cluster at approximately the same price, it creates a zone of high-probability reversal. The more precise the convergence, the stronger the signal.

Bullish vs Bearish Gartley

Feature	Bullish Gartley	Bearish Gartley
Shape	W-shape	M-shape
XA leg	Upward	Downward
Point D	78.6% retracement below A	78.6% retracement above A
Trade direction	Long at D	Short at D
Invalidation	Below X	Above X

Trading Rules

Entry

Enter at point D when price reaches the 78.6% retracement of XA. The most disciplined approach uses limit orders placed at the PRZ level in advance, rather than reactive market orders.

Candlestick confirmation at point D significantly improves the pattern’s reliability. Look for:

• Pin bars rejecting from the PRZ
• Engulfing patterns at point D
• Doji or hammer formations showing indecision and reversal

Entering without confirmation — simply placing a limit order at the PRZ — works for many Gartley traders, but adding a candlestick filter improves the win rate at the cost of occasionally missing the exact entry level.

Pattern Invalidation

The Gartley is invalid if:

• AB does not retrace close to 61.8% of XA (allow a small tolerance of 2-3%)
• CD extends beyond the 161.8% extension of BC
• Price reaches point X — the entire structure is broken

Strict adherence to the ratios is what gives the Gartley its statistical edge. Forcing patterns that do not meet the criteria destroys the pattern’s reliability.

Target

The Gartley uses Fibonacci retracements of the completed AD leg for targets:

• Target 1: 38.2% retracement of AD — the conservative target, most frequently hit
• Target 2: 61.8% retracement of AD — the moderate target
• Target 3: Point A — full retracement of AD, the most ambitious target

A common approach is to scale out: take 1/3 of the position off at T1, another 1/3 at T2, and trail the remainder toward T3.

Use the risk-reward calculator to plan these levels before entering. The Gartley’s structure typically provides 2:1 to 3:1 R:R on the full position.

Stop Placement

Place your stop beyond point X. This is the ultimate invalidation level — if price reaches X, the entire XABCD structure has failed, and the Fibonacci relationships that defined the pattern are broken.

Some traders use a tighter stop just beyond point D (a few pips beyond the PRZ). This reduces risk per trade but increases the chance of being stopped out on a slight overshoot of the PRZ before the reversal takes hold.

Journaling This Pattern

Harmonic patterns like the Gartley are uniquely suited to journaling because every element is measurable. There is no subjectivity — the Fibonacci ratios either aligned or they did not.

Record for every Gartley trade:

• Direction: Bullish or bearish
• AB ratio: Exact retracement percentage (e.g., 61.2%, 62.1%)
• BC ratio: Where in the 38.2%-88.6% range did it land?
• CD extension: What was the BC extension at point D?
• D ratio: How close was D to the 78.6% XA retracement?
• PRZ confirmation: Did you get a candlestick signal at D?
• Targets hit: Did price reach T1? T2? T3?
• Ratio deviation: How far did each ratio deviate from the ideal?
• Timeframe and pair

After 15-20 Gartley trades, PipJournal’s analytics become valuable. You can analyze whether allowing wider ratio tolerances (e.g., AB at 63% instead of 61.8%) helps or hurts your results. You can also see which currency pairs produce the cleanest Gartley patterns and which target levels are most frequently reached.

This data-driven approach to harmonic trading is what separates consistent harmonic traders from those who chase every XABCD shape they see.

Common Mistakes

Forcing the ratios. The most damaging mistake in harmonic trading. If the AB leg retraces 50% of XA instead of 61.8%, it is not a Gartley — it might be a Bat pattern (which uses different ratios) or no pattern at all. Forcing patterns that do not meet the criteria destroys your edge.

No stop at X. The Gartley has a precise invalidation level: point X. If price reaches X, the pattern has failed. Trading without a stop, or placing it at an arbitrary level, removes the pattern’s built-in risk management.

Entering before D completes. The pattern is only valid when all four legs are complete. Entering at point C, anticipating that D will form, means trading an incomplete pattern. Price may not retrace to the 78.6% level at all.

Ignoring candlestick confirmation. While limit orders at the PRZ work, adding candlestick confirmation at point D significantly improves results. A pin bar or engulfing at the PRZ confirms that the level is actually being rejected.

When It Fails

Gartley patterns fail when price pushes through point D and continues to point X and beyond. This typically happens when:

• The Fibonacci ratios were not accurate — the pattern was forced
• A fundamental catalyst drives price through the PRZ
• The pattern forms on a lower timeframe against a strong higher timeframe trend
• The PRZ has no additional confluence (no support/resistance, no moving average)

A failed Gartley — where price violates X — signals that the harmonic structure was not sufficient to reverse the trend. Once X is broken, exit immediately. Do not hope for a reversal.

Track every Gartley attempt in PipJournal, including those that never triggered because price did not reach D, and those that failed after entry. Your data will show the ratio deviations and conditions that predict success versus failure in your harmonic trading.

Bring precision to your harmonic trading. PipJournal tracks every Gartley setup, measures your success rate by ratio accuracy and confirmation method, and gives you AI-powered behavioral insights — $179 lifetime, no subscriptions ever.