What it means
The Gartley is a five-point harmonic pattern (X, A, B, C, D). In the bullish version, B retraces 0.618 of XA, C retraces 0.382–0.886 of AB, and D completes at 0.786 of XA, inside the original leg.
Point D is the potential reversal zone (PRZ).
Why traders use it
Harmonic traders believe that combining several Fibonacci ratios in one structure narrows the area where a pullback may end. The Gartley is the original pattern, described by H. M. Gartley in 1935 and given ratios later.
Chart examples
Bullish Gartley
How to identify it objectively
- 1XA: a clear impulse leg.
- 2B: about 0.618 of XA (with a small tolerance).
- 3C: 0.382 to 0.886 of AB.
- 4D: 0.786 of XA; the AB=CD leg often completes near the same area.
Bullish use
- 1Bullish Gartley: X low, A high, D near 0.786 of XA.
- 2Wait for a bullish reaction at D.
- 3Stop below X.
Bearish use
- 1Bearish Gartley: the same ratios inverted.
- 2Wait for a bearish reaction at D.
- 3Stop above X.
What confirms it
- Ratios within tolerance.
- D coincides with structure or liquidity.
- A reversal close at D.
What invalidates it
- Price closes beyond X.
- B or D far outside their ratios.
How a hypothetical setup is built
Entry
At D after a bullish reversal close.
Stop
Below X (the pattern is invalid beyond it).
Target
0.382 and then 0.618 of the AD leg.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
Historical testing
Not tested on The Tradeskill. In the drawing XA = 10 points: B = 103.82 (0.618), C = 107.64, D = 102.14 (0.786).
Limitations: when it fails
- Tolerance choices change which patterns qualify.
- Many patterns overshoot D.
- Harmonic ratios have no proven predictive edge on their own.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.