As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
|
 46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 |
As of 11/20/2024
Indus: 43,408 +139.53 +0.3%
Trans: 17,002 -26.31 -0.2%
Utils: 1,055 +1.25 +0.1%
Nasdaq: 18,966 -21.33 -0.1%
S&P 500: 5,917 +0.13 +0.0%
|
YTD
+15.2%
+6.9%
+19.7%
+26.3%
+24.1%
| |
|
46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,075 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 | ||
Statistics updated on 8/28/2020.
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 move after point D.
Let me also say that I have not read Gartley's book, so details of this pattern are based on Internet sources.
Bullish Gartley
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The above numbers are based on more than 1,900 perfect trades. See the glossary for definitions.
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 somewhat rare. Here are the traditional identification guidelines for the pattern.
| Characteristic | Discussion | 
The Bullish Gartley Retraces
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| XA | Price 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. | |
| AB | Price retraces from the peak A to valley B about 61.8% of the XA move. | |
| BC | After 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. | |
| CD | The 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. | |
| Invalid | If price drops below X on the way to finding D, then the pattern should be ignored. |
| Trading Tactic | Explanation | 
The Measure Rule
|
| Buy | Once 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. | |
| Stop | I chose a close below X as the stop location but once turn D is in place, that could serve as a closer stop. | |
| Measure rule | After price turns upward at D, the stock climbs to A 45% of the time, to B 98% of the time, and to C 59% of the time. The figure shows these hit rates. |
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 (the company was eaten by another company).
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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