What Is The Butterfly Pattern & How To Trade With It

Butterfly Pattern

The Butterfly pattern belongs to a family of Harmonic patterns and indicates a potential reversal. H.M. Gartley developed the pattern, later Scott Carney introduced Fibonacci levels and fined tuned it. What is the Butterfly pattern? The Butterfly pattern appears at key market reversals and pinpoints price’s highs and lows. It compromises of five points or legs (X, A, B, C, D) which are connected through Fibonacci ratios. Scott mentioned in his book, “Harmonic Trader” that the Butterfly requires specific Fib ratios for its formation. To validate its structure, he described that: The AB has to retrace up to 78.6% of …READ MORE