The Butterfly Pattern Harmonic Trading Strategy – Presentation #10

password is: slicktrade

Access The Full Harmonic Trading Guide

The Butterfly Harmonics pattern strategy for trading is excellent for earning huge profits. The Butterfly pattern draws similarity from the Gartley 222 pattern and one of its major benefits is that it allows you to purchase as well as sell at fresh lows/highs since the D wave terminates right ahead of the XA wave’s starting point.

Similar to other Harmonics pattern, the Butterfly pattern is essentially a 4-leg reversal setup. The pattern must fulfill the below mentioned Fibonacci retracement rules:

AB= It must complete a target of 0.786 or 78.6 percentage of the XA leg.

BC=This must be a minimum 38.2 percent as well as maximum 88.6 percent Fibonacci retracement level of the AB leg.

CD=Presents a target which is between 1.618 percent -2.618 Fibonacci extension level of the AB leg i.e. between 1.272-1.618 of the XA leg.

How to trade the Butterfly Harmonics Pattern?

When it comes to trading the Butterfly pattern, you must back test your strategy before implementing it in your strategy for trading. The first step to trading the Butterfly Harmonics pattern is to draw the chart pattern. The next step requires you to sell at the D point. The D point in the case of the Butterfly pattern is essentially an AB swing leg’s extension in the range of 1.618-2.618. In addition to this, it must also provide an XA swing leg’s extension in the range of 1.272-1.618. For instance, in the chart above, one can easily spot the bearish Butterfly in GBP/USD chart. This is an indication of selling and therefore you can sell anywhere in the range of 1.618-2.618 Fibonacci retracement level. 

After this, it is important to place your stop loss order. Ideally, you should place the stop loss order above 1.618 of the XA. Any momentum break will invalidate Fibonacci retracement needs for the Butterfly pattern automatically.

Receive Our New FREE 5 Part E-Course!

Get on the list for premium content directly to your inbox

I agree to have my personal information transfered to AWeber ( more information )

I will never give away, trade or sell your email address. You can unsubscribe at any time.