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1 By Suniiel A Mangwani Brought To You By This Is Not A Free Ebook Copyright Old Tree Publishing (Pty) Ltd Reproduction or translation of any part of this work by any means, electronic or mechanical, including photocopying, beyond that permitted by the copyright law, without permission of the publisher, is unlawful. This ebook and course can not be resold. Trading any financial market involves risk. This ebook and any part of the course that makes up Sure Fire Trading Plans and its contents is neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this ebook are for general information purposes only (contents shall also mean the website and any correspondence or newsletters related to the website). Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example the ability to withstand losses or to adhere to a particular trading program in spite of the trading losses are material points, which can also adversely affect trading results. There are numerous other factors related to the market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results. All of which can adversely affect actual trading results. We reserve the right to change these terms and conditions without notice. You can check for updates to this disclaimer at any time by visiting

2 The Gartley Pattern By Suniiel A Mangwani Price patterns by themselves (without moving averages and indicators) are all that is necessary to chart a market and understand what's happening. We might say that pattern recognition is the heart of technical analysis. If that's true, why are technical indicators the backbone of 99% of systems? Is it because we have trouble identifying those head and shoulders, cups with handles, and ascending triangles? The key to successful trading is to lose as little money as possible by keeping the losses low and profits high. If you have the right trading pattern that identifies those low risk / high probability of success trades, then you are setting yourself up for success. Here's a technique that uses a chart pattern only, is easy to master, and has a track record of 80% wins - The Gartley pattern. The Gartley pattern is classified as a harmonic pattern and these patterns can be very powerful and often give you straightforward entry and exit points when the patterns begin to form. They apply specific Fibonacci retracements and extensions to a price structure. At first, it may seem complicated, but if you've ever seen large swings in price and wished you could put a "face" to them, you may be surprised at what appears from identifying the price swings. It's really not very difficult; it just requires a few specific steps. The Gartley pattern was outlined by H.M. Gartley in his book Profits in the Stock Market, published in In his book Gartley describes a pattern that is a re-test of a top or bottom. This pattern prevents a trader from guessing a high or low since the pattern is a retest of a previous high or low. This is the main advantage of this pattern, as it leaves little to guesswork and relies only on specific Fibonacci numbers. It shows a series of price reversals and the retracement percentages that set up an ideal pattern. Although the pattern is named "The Gartley," the book did not discuss specific Fibonacci retracements! It was trading veteran Larry Pesavento who added the Fibonacci ratios to this pattern, by setting a precise set of rules to this continuation pattern. Larry had stated the Gartley is one of the best patterns I ever found, and it is an extremely accurate pattern.

3 The Gartley is made up of a series of price reversals and the retracement percentages that set up an ideal pattern. The specification of Fibonacci points within each structure is critical in deciding valid trading opportunities. Fibonacci numbers are used often for identifying retracements and extensions in the financial markets. Major ratios between Fibonacci numbers identify retracement levels as markets pull back after rallies or sell-offs. The most common Fibonacci retracements are 38%, 50% and 62% of the price movement. These are price levels were many traders expect important reversals and bounces. In short, Fibonacci techniques provide traders with a reliable way to locate potential entry and exit levels. The Gartley Pattern relies on a 78% retracement and represents another way to capitalize on those caught in a 62% whipsaw. This classic setup described almost 70 years ago works just as well now as it did during that time. Here we have the structure of a bullish Gartley pattern The figure shows an uptrend XA with a price reversal at A. The swing points XA form the boundary of the pattern and the pattern should develop within these points. Using Fibonacci ratios the retracement AB should be 61.8% of the price range A to X, as shown along line XB. At B the price reverses again. Ideally, the retracement BC should be between 61.8% and 78.6% of the AB price range - note the length of the lines and is shown along the line AC. At C, the price again reverses. Using Fibonacci ratios, the retracement CD should be between 127% and 161.8% of the range BC and is shown along the line BD.

4 One further ideal is for CD to equal AB in time length and not necessarily in price length. Price D is the trigger to buy. The target retracement DT is initially 61.8% of the range CD; however, the price could go through the roof. As we can see, the most effective Gartley pattern requires an exact specification of Fibonacci ratios to validate the structure. We can summarize the exact set of rules stated above as - Precise 61.8% B point retracement of XA leg. C point within range of retracement. Equivalent AB=CD pattern is quite common. XD to be XA, retracement. In short the Gartley pattern consists of a large impulse wave followed by a pullback in two shorter waves where AB = CD in time length, which can also be described as a reactive or corrective pattern that retraces a portion of the impulsive trend. Ideally all the above mentioned movements should fall within the Fibonacci ratios mentioned but there are two critical parts for forecasting this pattern. These two conditions should be met accurately for the pattern to be valid. First, the retracement BC should be between 61.8% and 78.6% of XA, therefore identifying price C as a Potential Reversal Zone. Second, the overall retracement XD should be a retracement of the range XA. This forms the most critical part of forecasting and XD should ideally be 78.6% of the range XA. The reversal point D becomes the pivotal point for a reversal since it has a confluence of Fibonacci levels from the previous swings to confirm the reversal zone The first and most important is the XA. Second is the BC projection of to BC. This means the Fibonacci relationships that are projected from different areas of the structure all come to the same conclusion as to where we can expect point D to form. Point D is where we would look to enter the market with a bullish position in this example. The power in Fibonacci ratios is anticipating (in time) and entering (in price) the trade at point D with a defined risk level. Most pattern traders will instantly recognize this larger five-point pattern as a bull or bear flag setup. It is also the underlying structure that defines Elliott wave theory in its simplest form. The basic difference between an Elliot wave pattern and the Gartley pattern is that Gartley patterns occur mostly in a corrective market, whereas Elliott 5 wave patterns occur mostly in Impulsive markets.

5 The Gartley pattern can be found on any time frame and once identified it can even be traded for short positions within the pattern itself. If the first two legs of the pattern have been established a trade can be taken in anticipation of unfolding of the pattern to its last leg. This is because the rules for the pattern are specific and the next part of the formation can be predicted with great accuracy. For traders this becomes an excellent pattern since it is incredibly accurate and requires a smaller stop loss than most patterns thus giving a better risk-to-reward ratio. By Suniiel A Mangwani Brought To You By