Short answer: the gartley pattern is a four-leg pullback structure, labelled X, A, B, C and D. It marks where a correction should end and the prior trend should resume. Its defining fibonacci ratios are a B point at 61.8 percent of XA and a D point at 78.6 percent of XA. The CD leg stretches 127.2 to 161.8 percent of BC. You enter at D, place the stop beyond X, and take profit at retracements of the AD swing. It is a precise entry technique, not a forecast, and it fails plainly once price closes past X.
Where the Gartley pattern came from
Harold McKinley Gartley described the shape in a 1935 book on stock market analysis. It sat on page 222, which is why older traders still call it the 222 pattern. His original drawing carried no fibonacci ratios at all. It was an ordinary observation: price retraces, bounces, then retraces once more to a slightly deeper level before the trend continues. Later analysts attached the 61.8 and 78.6 percent numbers, and that is the version quoted in most technical analysis texts. Treat the ratios as tolerances bolted onto a humble pullback idea, not as laws. Markets seldom respect a level to the pip, and a trader who demands perfection will scarcely ever take a trade.
The ratios that define a Gartley
Every Gartley starts with an impulse move from X to A. Everything after that is measured against XA or against the leg before it. In the bullish version XA points up, D sits below A, and you buy at D. The bearish version is the mirror image.
| Leg or point | Measured against | Gartley requirement | What a miss tells you |
|---|---|---|---|
| B | XA retracement | 61.8 percent, roughly 55 to 65 tolerated | Deeper B is a different harmonic structure; shallower B means the trend is stubbornly strong |
| C | AB retracement | 38.2 to 88.6 percent | C beyond A voids the setup |
| D | XA retracement | 78.6 percent | D beyond X means the pullback became a market reversal |
| CD | BC extension | 127.2 to 161.8 percent | A stubby CD that stops short seldom turns cleanly |
| AB versus CD | Length of AB | Roughly equal | A lopsided CD, far longer than AB, warns that momentum is against you |
The 61.8 percent B point is the most consequential number in the table. It separates the Gartley from its cousins among harmonic patterns, which share the letters but use different retracements. If B lands at 50 percent, you do not have a Gartley, whatever D looks like. The 78.6 percent D level is one of the standard fibonacci retracement levels on every charting tool, so a crowded group of traders is watching the same price. That is why the level reacts, and why the reaction can be violently brief.
How to find the D-point zone step by step
- Mark X and A on a completed impulse. Anchor to wicks or closes and never switch mid-pattern.
- Wait for B. Confirm it sits near 61.8 percent of XA. If it does not, walk away without hesitancy.
- Wait for C. It must stay short of A and retrace 38.2 to 88.6 percent of AB.
- Project D two ways: the 78.6 percent retracement of XA, then the 127.2 and 161.8 percent extensions of BC. The overlap is your zone.
- Look for what else sits there. A prior swing low or a level from your support and resistance map raises the attractiveness of the zone.
- Set a price alert at the top of the zone, then stop staring at the chart.
On a four-hour forex chart the zone is usually 10 to 20 pips wide. A lumpy zone with the two projections far apart is a sign the pattern is patchy, and patchy patterns produce wobbly entries.
Entry, stop and targets: a Gartley trading strategy
Three entry styles cover most trading strategies built on this pattern, and each trades fill quality against confirmation.
- Limit order at the 78.6 level. Punctual fills and the best price, but a jittery data release can push straight through the zone.
- Rejection candle inside the zone. Later entry and a worse price, but far fewer fake fills.
- Half and half. Half at the level, the rest once a candle closes back above the zone.
The stop goes beyond X with a small buffer, because a close past X breaks the structure. Never tuck it inside the zone; that turns a forgiving setup into a brittle one. Targets come from the AD swing: 38.2 percent of AD for the first exit, 61.8 percent for the second, and point A for the last. Splitting the exit into three pieces adds spread and commission cost on each partial, so on a small account two exits are tidier than three.
A worked example on a 10,000 account
Take EUR/USD on a four-hour chart. X is 1.0800 and A is 1.0900, so XA is 100 pips. Price falls to 1.0838, retracing 62 pips, which is 61.8 percent. That is B. It then climbs to 1.0887, retracing about 79 percent of AB. That is C, and it stays below A.
The 78.6 percent retracement of XA sits at 1.0821. BC is 49 pips, so the 127.2 percent extension lands at 1.0825 and the 161.8 percent extension at 1.0808. The zone is 1.0808 to 1.0825, with the 78.6 level inside it. A limit buy goes at 1.0821 and the stop at 1.0790, ten pips under X, for 31 pips of risk.
On a 10,000 account risking 1 percent, that is 100 in play, or about 3 per pip, roughly 0.3 standard lots. AD measures 79 pips, so the targets are:
- First target 1.0851, 30 pips, roughly 1 to 1.
- Second target 1.0870, 49 pips, about 1.6 to 1.
- Third target 1.0900 at point A, 79 pips, about 2.5 to 1.
If price dips to 1.0815, prints a long lower wick, and closes at 1.0830, your limit filled and the first target is 30 pips away. If the candle closes at 1.0785 instead, the trade is done and you lost 1 percent. Every number existed before the fill, which is what makes the Gartley useful under pressure.
Common mistakes that turn a Gartley into a loss
- Forcing the B point. If B is at 70 percent and you round it down to 61.8, you have drawn a wish.
- Entering before C is finished. A C that keeps climbing can push through A, and then there is no pattern.
- Placing the stop inside the zone. The zone exists to absorb a sloppy low; a stop inside it gets clipped needlessly.
- Ignoring the higher timeframe. A D point that breaks X is often the first leg of one of the genuine trend reversal patterns, so a counter-trend Gartley deserves a smaller size.
- Redrawing X and A after the fact. Moving the anchors until the ratios fit is the fastest way to squander a month of honest work.
Most of these errors share one root: ambiguity about where the legs begin and end. Fix the wick-or-close rule once and the rest mostly disappear.
Trading the Gartley inside prop-firm limits
The Gartley suits an evaluation account better than most trading techniques, because the stop is defined by structure rather than by mood. You know the X point before entry, so you know the risk before entry. Pivex uses a daily loss allowance that starts fresh every day and a fixed total drawdown. A trader who takes every Gartley at 1 percent risk can therefore count on one hand how many losers it takes to breach either line. With no clock on the attempt and no minimum day count, there is no need to chase a patchy pattern just to stay active. Most trading platforms carry the retracement and extension tools the pattern needs, and Match-Trader, which Pivex runs on, is no exception.
Your next step is to mark the last five completed impulses on one instrument, measure B and D on each, and note how many actually qualified. That count will be smaller than you expect, and that is the lesson. If you plan to attempt a Pivex evaluation, run the same exercise on the pairs and timeframes you intend to trade there. Let the X-point stop set your size every time.
Related guides: fibonacci retracement and trend reversal patterns.
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