Technical & Chart AnalysisGartley pattern
Harmonic Pattern
A five-point XABCD price structure whose legs must satisfy specific Fibonacci ratios before it is considered a valid trade setup.
What Harmonic Pattern means
Harmonic patterns take the geometric approach popularised by H. M. Gartley and later formalised with Fibonacci measurements by Scott Carney and others. Each pattern is drawn through five turning points labelled X, A, B, C and D, and validity depends on the retracement and extension ratios between the legs. The Gartley requires B near 61.8 percent of XA and D near 78.6 percent of XA. The Bat uses a shallower B and a D at 88.6 percent of XA. Butterfly and Crab patterns place D beyond X, at roughly 127 and 161.8 percent respectively.
Point D is the potential reversal zone, where a trade is taken against the CD leg with a stop just beyond D and objectives commonly set at retracements of the AD leg. The appeal is precision: the ratios define entry, invalidation and targets numerically rather than by eye. The honest limitation is that these ratios have no established causal basis, tolerance bands of a few percent are usually permitted so identification remains partly discretionary, and independent academic validation of harmonic patterns is thin.
Worked example
On EUR/USD, X at 1.0700, A at 1.0950, B at 1.0796 (61.8 percent of XA) and C at 1.0900 would place a Gartley D near 1.0754, the 78.6 percent retracement, where a long could be taken with a stop below 1.0700.
Related terms
- Fibonacci RetracementHorizontal levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior swing, used to anticipate where a pullback may end.
- Fibonacci ExtensionLevels projected beyond a completed swing, commonly 127.2%, 161.8% and 261.8%, used to set profit targets.
- RetracementA temporary counter-trend move that gives back part of a prior advance or decline before the trend resumes.
- Technical AnalysisThe study of historical price and volume data, usually on charts, to form expectations about future price movement.
- Price ActionAn approach that reads raw price movement, candle structure and levels directly, with few or no derived indicators on the chart.
Frequently asked questions
What does Harmonic Pattern mean in forex trading?
A five-point XABCD price structure whose legs must satisfy specific Fibonacci ratios before it is considered a valid trade setup.
How does Harmonic Pattern work in practice?
Point D is the potential reversal zone, where a trade is taken against the CD leg with a stop just beyond D and objectives commonly set at retracements of the AD leg. The appeal is precision: the ratios define entry, invalidation and targets numerically rather than by eye. The honest limitation is that these ratios have no established causal basis, tolerance bands of a few percent are usually permitted so identification remains partly discretionary, and independent academic validation of harmonic patterns is thin.
What is an example of Harmonic Pattern?
On EUR/USD, X at 1.0700, A at 1.0950, B at 1.0796 (61.8 percent of XA) and C at 1.0900 would place a Gartley D near 1.0754, the 78.6 percent retracement, where a long could be taken with a stop below 1.0700.
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