As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Bulkowski's Bullish Gartley

 

Statistics updated on 6/7/2019. Rank updated on 7/26/19.

The Gartley pattern is named after its founder H.M. Gartley. It's sometimes known as the Gartley 222 because it appeared on page 222 of his book, Profits in the Stock Market, published in 1935. I programmed my computer to automatically find this pattern and tested how well the pattern works. I split the Gartley pattern into two articles. This article discusses the bullish Gartley, the variation with an upward breakout.

Let me also say that I have not read Gartley's book, so details of this pattern are based on Internet sources.

The bullish Gartley
Bullish Gartley

 

Bullish Gartley: Important Results

Overall performance rank for up/down breakouts (1 is best): 23 out of 56/19 out of 53
Break even failure rate for up/down breakouts: 11%; 23%
Average rise/decline: 48%; 15%
Throwback/pullback rate: 65%; 64%
Percentage meeting price target for up breakouts: 94% (94% reach point B)

The above numbers are based on 652/519 perfect trades with up/down breakouts. Downward breakouts measure the drop below the bottom of the pattern. Upward breakouts measure the rise above the top of the pattern, not above D. See the glossary for definitions.

Bullish Gartley: Identification Guidelines

The Gartley pattern is complex because it deals with Fibonacci ratios. Trying to find it without a computer or calculator is a difficult exercise.

The chart pattern can be classified as a variation of a measured move down. The A and C tops look like an ugly double top, too.

Having so many rules makes the pattern rare. Here are the traditional identification guidelines for the pattern.

CharacteristicDiscussion Gartley chart pattern retraces
The Bullish Gartley Retraces
XAPrice rises from X (see figure on the right, not drawn to scale) to peak at A. This is typically a large upward move to accommodate the retraces that follow.
ABPrice retraces from the peak A to valley B about 61.8% of the XA move.
BCAfter bottoming at B, price climbs to C. The BC move retraces 61.8% or 78.6% of the AB drop. For testing, I chose to interpret this as a range of acceptable values.
CDThe final leg of the pattern sees price drop from peak C to the valley at D. The CD move is 127% or 161.8% of the BC move. For testing, I chose to interpret this as a range of acceptable values.
InvalidIf price drops below X on the way to finding D, then the pattern should be ignored.

Top of page

Bullish Gartley: Trading Tips

Trading TacticExplanation Gartley chart pattern measure rule
The Measure Rule
BuyOnce price turns at D, buy. That's the problem with trading this pattern. How do you know the stock has completed the turn at D? For an estimate of the turning price, use the BC move. CD should be 127% or 162% longer than BC, but be flexible since it rarely holds true.
StopI chose a close below X as the stop location but once turn D is in place, that could serve as a closer stop.
Measure RuleThe target price zone is between valley B and peak A. The associated figure shows how often price reaches those targets.

Testing showed that 44% of the Gartley's I looked at continue lower, closing below X to stage a downward breakout. Thus, buying at turn D is can risk failure 44% of the time.

I measured the rise from the low at D to either a 20% trend change (price drops 20% from a peak) or closes below X.

I found that 94% of the patterns I looked continued up to B, 54% hit C, and 46% reached A.

Top of page

Bullish Gartley: Trading Example

Gartley chart pattern trading example

Let's take a look at a trading example.

I show the Gartley on the daily chart of Abaxis. X is at 31, A is at 40.60, B is at 34.70, C is 38.60 and D is 33.30.

The AB retrace of XA is 62%. The BC/AB climb is 67%, about mid range between 61.8% and 78.6%. The CD/BC move is 135%, toward the low end of the 127% to 161.8% range.

After D, the stock moves up slowly before running out of data. In other words, the "ultimate high" (see the glossary) has not been found yet.

The gain so far has peaked at 45% above the low at D.

Notice how choppy the Gartley appears when compared to the idealized figure at the top of this article. That's typical for long patterns.

Would you be able to spot this as a Gartley if the labels were not attached?

-- Thomas Bulkowski

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See Also

 

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My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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