Gartley pattern — the original harmonic formation with entry at 0.786 of XA

The Gartley is the prototype of every harmonic formation — the whole school of analysis started with it. H.M. Gartley sketched its shape back in 1935, though the specific Fibonacci ratios were assigned to it by Scott Carney several decades later. On a chart it draws a five-point M or W, and its signature is a single level: the entry on a 0.786 retracement of the XA leg, still inside the initial move. Below I explain how to recognise it and how to trade it.

What the Gartley pattern is and where it came from

The Gartley is a five-point reversal formation labelled X-A-B-C-D, which Harold McKinley Gartley presented in his 1935 book "Profits in the Stock Market." Importantly, Gartley himself drew only the general arrangement of five points at the time — without any numbers. It was Scott Carney, in the late 1990s, who assigned the formation strict Fibonacci ratios and folded it into his family of harmonic patterns. That is why today we speak of the "Gartley 222" or simply the classic Gartley, meaning the version with specific retracements.

Carney treats it as a continuation pattern after a pullback: it appears when a market retraces within an existing trend and then turns back to the dominant direction. If you are just starting out, work through the basics of trading harmonic patterns first — they all rest on the same relationships between swings and differ only in the specific retracement and extension levels.

Structure and Fibonacci levels

"Harmonic patterns identify price relationships using Fibonacci ratio analysis to define precise turning points in the market." — Scott M. Carney, Harmonic Trading, Volume One, Pearson, 2010

The formation is made of five points joined by four legs: X-A, A-B, B-C and C-D. The X-A leg is the longest, initial move that defines the entire span of the pattern. The A-B leg is a pullback that ends point B exactly at the 0.618 retracement of the XA leg — and this, in Carney's view, is the single most important element of the whole Gartley. If point B lands elsewhere, you are usually looking at a different harmonic formation rather than a Gartley.

Then comes the B-C leg, which gives a 1.27 or 1.618 extension of the A-B leg. The final segment, the C-D leg, leads to the entry zone: point D completes at the 0.786 retracement of the XA leg. At the same spot an AB=CD should converge — an equality of leg lengths measured from the end — together with the B-C extension. This triple convergence marks the potential reversal zone. To locate these levels you use the same tools as for Fibonacci extensions when projecting targets.

How to recognise the formation step by step

Step 1 — find the X-A leg and the trend context

Start with a clear impulsive move that defines the X-A leg. Point X is the start of the whole structure, and point A is its high or low. The Gartley works best with the dominant trend, as a signal of a return to it after a pullback, so first judge the direction on a higher timeframe.

Step 2 — confirm point B at 0.618 of the XA leg

This is the measurement that decides everything. Use the Fibonacci tool to check whether the A-B pullback ends point B exactly at 0.618 of the XA leg. If it lands shallower, at 0.382 or 0.500, you are probably looking at a Bat. If deeper, it is neither of those two formations.

Step 3 — check the B-C leg and the completion of point D

First make sure the B-C leg gives a 1.27 or 1.618 extension of the A-B leg. Then the crucial part: the C-D retracement should halt exactly at the 0.786 retracement of the XA leg, where the AB=CD completes. The convergence of these measurements marks the entry zone — and that is your point D, not any earlier level.

Entry, stop and targets — a hypothetical example

Take the setup from the table above. Once price reaches the D zone around 1.0843, do not enter blindly at the 0.786 level — wait for confirmation from price: a reversal candle, a hammer, or a bullish engulfing in the D zone, and only then open the long. The stop goes just beyond point X, slightly below 1.0800: if the market breaks the XA extreme, the whole structure falls apart, so that is the natural invalidation level.

Set targets conservatively: the first take profit is the 0.382 retracement of the A-D leg, the second around 0.618. Because the entry in a Gartley falls higher than in a Bat, further from point X, the stop is a little wider, and the realistic risk-to-reward ratio usually lands near one to two. Remember, though: the figures above are illustrative and show the logic of the formation, not a forecast of the rate.

The most common mistakes when trading the Gartley

1. Accepting point B away from 0.618 of the XA leg — this is the most frequent error, because without that level there is no Gartley, only a stretched shape you have forced into a pattern.
2. Entering before point D completes, while price has not yet reached the 0.786 retracement of the XA leg — opening the position early throws away the whole edge of a precise entry.
3. Skipping price confirmation and entering the Fibonacci level itself, with no reversal candle in the D zone.
4. Confusing the Gartley with the Bat — once price falls to 0.886 of the XA leg, it is no longer a Gartley, and the entry at 0.786 turns out to be premature.
5. Trading against the dominant trend — the Gartley makes sense as a return to the trend after a pullback, not as an attempt to catch tops and bottoms across the market.

How the Gartley differs from other harmonic patterns

The Gartley's closest relative is the Bat pattern — both end the entry on a retracement of the XA leg, but the Bat goes deeper, to 0.886 instead of 0.786, and requires a shallower point B (you can follow those ratios in the guide to the Gartley and Bat patterns). The butterfly pattern and the crab pattern, in turn, belong to the group of extension patterns: their point D falls beyond point X, at 1.27 or even 1.618 of the XA leg. That is the fundamental difference — the Gartley and Bat are retracement patterns, in which D sits inside the XA leg, whereas the butterfly and crab extend past it. The Gartley is the gentlest of the family: its shallow entry means the market need not reach a fresh extreme to complete.

Who this pattern is for

Let us be honest: even though the Gartley is the oldest, it is not a beginner's formation. It demands precise measurements of four legs at once, and on a historical chart it is easy to convince yourself the ratios "fit" when they are really being stretched. Before you reach for it, get a solid grip on support and resistance, on price action, and on the broader technical analysis behind these tools. Plain Fibonacci retracements are another good foundation — without reading those levels fluently, the measurements in the Gartley are just guesswork. Treat it as a complementary tool, best combined with an oscillator divergence and clear support or resistance in the D zone, not a standalone system.

What to do tomorrow to start learning the Gartley pattern

1. Open TradingView on EUR/USD in the hourly timeframe and review recent clear pullbacks within a trend, marking points X-A-B-C in turn — this trains you to see the formation's context before any tradable entry signal appears at point D.
2. On each candidate, use the Fibonacci tool to check whether point B lands exactly at 0.618 of the XA leg, and then whether the retracement to point D halts at 0.786 of the XA leg — if both measurements do not fit, drop the setup without regret.
3. Set up a simple journal with columns for the ratios of the four legs, the entry location, the stop-loss level just beyond point X and the achieved risk-to-reward, then fill it in after every demo trade.
4. Place a price alert at the 0.786 level of the XA leg on a pair you are watching, instead of staring at the chart for hours — when price reaches the D zone you can calmly judge whether a confirming reversal candle is forming, or skip the trade.
5. Complete at least twenty demo trades using the Gartley exclusively and document each one with its result — only a repeatable success rate on this precise formation justifies moving it to a live account.