Gartley

What Is the Gartley Pattern?

The Gartley is a four-leg harmonic reversal pattern discovered by H.M. Gartley in 1935.

It’s one of the most reliable harmonic setups in forex because it combines:

1. Precise Fibonacci ratios that define structure
2. Clear reversal geometry that repeats across timeframes
3. Low-noise entry signals when you wait for D point confirmation

The pattern works because markets respect Fibonacci-defined retracements. Once price forms three legs (XA, AB, BC), the fourth leg (CD) is largely predictable.

The Gartley has become a professional trader staple. Hedge funds and institutional trading desks use harmonic patterns because the math works.

Pattern Structure: The Four Legs

A Gartley has four price movements:

Leg 1: XA (The Impulse) Price moves from X to A. This is the initial directional move. Can be up or down. No ratio requirement—just the starting point.

Leg 2: AB (The Retracement) Price retraces from A back toward X. Should retrace 38.2% to 61.8% of XA. If AB retraces more than 61.8%, it’s not a Gartley.

Leg 3: BC (The Continuation) Price bounces from B and moves partially back toward A. Should retrace AB at 38.2% to 88.6%. This is the leg with the widest acceptable range.

Leg 4: CD (The Final Leg) Price retraces from C back down (or up, if bearish). The D point (where CD completes) should land at 78.6% of XA. This is the critical ratio.

The D Point: The Money Zone

The D point is where the setup trades.

A bullish Gartley (uptrend reversal setup) has:

• D point at 78.6% retracement of XA
• Reversal candle at D (pin bar, engulfing, inside bar, doji)
• Entry at D point
• Stop below D

A bearish Gartley (downtrend reversal setup) is the mirror:

• D point at 78.6% retracement of XA
• Reversal candle at D
• Entry at D point
• Stop above D

The 78.6% ratio is what makes Gartley different from Butterfly (127.2%), Bat (88.6%), or Crab (161.8%) patterns.

Lower D ratios = less extension = tighter stop loss = better risk:reward for Gartley.

Identifying a Gartley: Step by Step

Step 1: Find the X Point Start at any significant support or resistance. This is your X point.

Step 2: Measure XA Find the impulse move from X to A. Measure the distance in pips (or % of move).

Step 3: Check AB Retracement AB should retrace 38.2–61.8% of XA. If AB retraces more, it’s not a Gartley pattern.

Step 4: Check BC Retracement BC should retrace 38.2–88.6% of AB. Wider range, but the ratios must be precise.

Step 5: Project D Point D point should land at 78.6% retracement of XA. Use your Fibonacci tool to verify.

Step 6: Wait for D Point Confirmation This is critical. Price must show a candlestick pattern at or near 78.6% that signals reversal: pin bar, engulfing, inside bar, doji, or gap.

Without confirmation, you have structure but no edge.

Trading the Gartley: Entry and Exit

Entry Rules

Location: At the D point after confirmation.

Confirmation Required:

• Candlestick close at or above D (bullish Gartley) or at or below D (bearish Gartley)
• Visual reversal candle: pin bar, engulfing, inside bar, or doji
• Ideally: wick touches D, then body closes opposite (strongest confirmation)

Timing: Do not anticipate. Enter only after confirmation candle closes. A pending order at D catches winners but also catches breakfakes.

Position Sizing:

• Risk 1–2% of your account on this trade
• If D is at 1.0950 and stop is at 1.0935, you’re risking 15 pips
• Size accordingly: small account, small stop loss = small position

Exit Rules

First Target (TP1): 61.8% of CD Measure the CD leg. 61.8% of that distance from D = TP1. This gives you a 1:1 to 1.2:1 risk:reward ratio immediately.

Example:

• D point: 1.0950
• C point: 1.0980
• CD distance: 30 pips
• 61.8% of 30 = 18.5 pips
• TP1: 1.0950 + 18.5 = 1.0968.5

Take profits here if you’re risk-averse. Lock in the 1:1.

Second Target (TP2): 100% of CD Full extension of the CD move.

Example:

• TP2: 1.0950 + 30 = 1.0980 (complete CD move)
• Risk:reward ratio: 1:2 (excellent)

Stop Loss: 5–20 Pips Beyond D Depends on timeframe and volatility.

Example:

• D point: 1.0950
• Stop loss: 1.0935 (15 pips away)

Use the nearest swing high or low as a reference for the stop. Don’t just guess.

Partial Profit-Taking: Many traders take 50% at TP1 and trail the stop to break-even on the remainder. This gives you a free trade on the second half.

Example: EURUSD Bullish Gartley (Actual Levels)

Let’s say you’re analyzing EURUSD on the 4H chart:

• X point: 1.0900 (support level)
• A point: 1.1100 (impulse, +200 pips)
• B point: 1.1020 (AB = 80 pips = 40% of XA, valid)
• C point: 1.1055 (BC = 35 pips = 43.75% of AB, valid)
• D point projection: 78.6% of XA = 0.786 × 200 = 157 pips below A
  • D should be at 1.1100 - 157 = 1.0943

You wait at D (1.0943).

Price approaches 1.0943. A pin bar forms with lower wick touching 1.0942 and body closing at 1.0950.

This is your confirmation. You enter LONG at 1.0950.

Stop loss: 1.0935 (15 pips below D, near the swing low) TP1: 61.8% of CD = 0.618 × 55 = 34 pips → 1.0950 + 34 = 1.0984 TP2: 100% of CD = 55 pips → 1.0950 + 55 = 1.1005

Risk: 15 pips Reward (TP1): 34 pips = 2.26:1 ratio Reward (TP2): 55 pips = 3.66:1 ratio

You take 50% at TP1 (1.0984), trail stop to 1.0951 (break-even + 1 pip) on the remainder, and let it run to TP2.

Why Gartley Works

Gartley works because it combines geometry + psychology.

The geometry (Fibonacci ratios) defines where price exhaustion points are.

The psychology causes traders to reverse near those exact points because:

1. Traders see support at swing lows
2. Fibonacci traders anticipate D point
3. Algorithm traders program these levels
4. Price reverses at D, which confirms the pattern to new traders, attracting more buying

This self-fulfilling prophecy is why harmonic patterns work.

It’s not magic. It’s probability + crowd behavior.

Gartley Success Rate: The Reality

Well-executed Gartley patterns have a 65–75% win rate when:

• You wait for confirmation at D
• You use strict Fibonacci ratios
• You trade on H4 or higher timeframes
• You trade in trending markets (not choppy ranges)

What ruins the win rate:

• Entering before D point confirmation (early entry fails 40% of the time)
• Ignoring precise ratios (approximate Gartley = 50% win rate)
• Trading Gartley in tight ranges (patterns fail in choppy markets)
• Chasing second targets instead of taking profits (emotional holds turn winners into breakevens)

The edge isn’t in the pattern itself. The edge is in the discipline to wait for D, confirm, and exit at targets.

Journaling the Gartley: What to Record

Every time you trade a Gartley, journal:

1. Pattern Ratios: Did AB hit 45%? Did BC hit 60%? How close was D to 78.6%?
2. Confirmation Type: Pin bar? Engulfing? Doji? Which confirmation works best for you?
3. Timeframe: Did this Gartley work on 4H but fail on 1H?
4. Market Context: Was this trending or choppy? When do Gartleys fail for you?
5. Entry Timing: Did you enter at D or chase 5 pips later? (Timing matters.)
6. Psychology Notes: Did you hold for TP2? Did you panic at -10 pips?
7. Outcome: Did you hit TP1? TP2? Get stopped out?

Over 30 Gartley trades, you’ll see patterns:

• “My win rate is 72% when I wait for pin bar confirmation”
• “Gartley fails when BC is over 75% of AB”
• “I chase entries and reduce my win rate by 15%”

That self-knowledge is the real edge.

Common Mistakes: How to Avoid Them

Mistake 1: Trading “Close Enough” Gartleys Your D point is at 76%, but you enter anyway because “it’s close.”

It’s not close. Harmonic trading requires precision. If D is at 76%, it’s not a Gartley—it’s a Bat or something else.

Use Fibonacci tools that measure to 0.1% precision. Measure twice. Enter once.

Mistake 2: Entering Before D is Confirmed You see the pattern forming. You place a pending order at D. Price reaches D without a reversal candlestick and blows through your stop.

Patience is the edge. Wait for the reversal candle. A pin bar at D beats a pending order at D by 20+ percentage points in win rate.

Mistake 3: Ignoring Market Context Gartley works great in trends. It fails badly in tight ranges and choppy consolidations.

Before entering a Gartley, ask: “Is price trending, ranging, or consolidating?” Only trade Gartley in trending or strong support/resistance zones.

Mistake 4: Using Tight Stops A 5-pip stop on a 4-hour Gartley is unrealistic. Price wicks into your stop and reverses without you.

Use 10–20 pip stops on H4. Use 20–40 pip stops on D1. Let the timeframe determine your stop size.

Mistake 5: Chasing the Second Target You hit TP1 (great!). Instead of taking the win, you hold for TP2. Price retraces and stops you out at break-even.

Know your targets before you enter. If you’re 50-50 on TP1/TP2, take TP1 and let the second half run. Greed kills Gartley traders.

When Gartley Fails

Gartley fails in:

1. Choppy ranges where support and resistance are unclear
2. News events (FOMC, non-farm payroll) that break technical structure
3. Low liquidity pairs (exotics, crosses) where Fibonacci levels don’t hold
4. Shattered D points where the ratio is approximate, not precise

If your Gartley shows a failed pattern, it’s not a loss—it’s information. Journal it. Was it low liquidity? Was D at 75% instead of 78.6%? Did you chase the entry? Learn the failure pattern.

Final Thought: Gartley as a System

The Gartley isn’t a Holy Grail. It won’t make you rich overnight.

But when you combine:

• Precise Fibonacci ratios
• Strict entry confirmation
• Clear risk:reward targets
• Journaling and pattern recognition

…you have a repeatable system with a 65–75% win rate.

That’s better than most traders achieve. And better is an edge.

The professionals use harmonic patterns because they work. Not because they’re magic, but because they respect the math and the patience required.

Your edge isn’t learning the Gartley. Your edge is executing the Gartley better than 90% of traders who trade it.

That comes from journaling, discipline, and repetition.