Hartley Patterns

2022년 5월 10일

Hello everyone
Today we will talk about another method of analysis that will help you bring significant profits.
Let's go!

Introduction

H.M. Hartley in 1935 in the book "Profit on the stock market" for the first time revealed Hartley's patterns. Gatli patterns are used in technical analysis and are based on Fibonacci values. The patterns are reversal patterns and have clear rules and an excellent profit-to-risk ratio.

Hartley patterns work better than most well-known graphic formations, which also use different Fibonacci levels, but not as clearly as in Hartley patterns.

Designations

Hartley decided to designate waves with 5 letters for simplicity:

The letter X - is the beginning of the trend;
The letter A - is the end of the trend;
The letter B - is the first pullback of the trend;
The letter C - is a rollback correction (not breaking through the level of point A);
The letter D - is the target of the letter C.

The zones for the letters B, C, D are determined using the Fibonacci ratio between XA and AB.
Patterns are divided into types and have their own names, in addition, patterns work for any direction of the market.

Let's take a closer look at the patterns.

Bat

Pattern formation: the price reaches the maximum/minimum of the XA wave and forms a point B at the Fibonacci correction level from 38.2 to 50%. Using the XA points, you can find the value of the D point, which usually tends to the Fibonacci retracement level of 88.6% relative to XA.
In this case, CD is most often longer than the segment AB.


Butterfly

When wave B finishes its formation at the Fibonacci retracement level of 78.68%, they talk about the formation of a Butterfly pattern. At the same time, the target for wave D will be values beyond XA and will be 1.27-1.618 XA.

Crab

This pattern is formed when the price touches and bounces off the maximum/minimum of the XA oscillation and forms a point B at the Fibonacci correction level from 38.2-61.8%. The goal of point D is outside the original segment XA and is 1,618 XA

Simplifying pattern identification

With careful study of patterns, it can be noticed that the formation of patterns depends on the location of wave B in relation to XA. Apart from the drivers and 5-0 patterns, there is an easier way to identify the remaining patterns.

Let's divide the values of wave B by Fibonacci levels.

1) 38.2%: Bat, crab
2) 50%: Bat, crab
3) 61.8%: Bat, crab, AB = CD
4) 78.6%: Butterfly
5) 88.6%: Deep crab.

If you see one of these values, you can understand which pattern is being formed. For example, if you see on the chart that the price reaches the level of 50%, then you can expect a Bat or crab figure.

To calculate where the point C will be, you can use Fibonacci levels relative to the point AB: on 38,2%, 50%, 61,8%, 78,6 % and 88.6%.

Now let's define goal D.

1) Bat: 88.6% Fibo HA or 2,618 BC
2) Alternative Bat: 113% Fibo XA (below X) OR 2.0 BC
3) Crab: 161.8% Fibo (below X) OR 3.14 BC
4) Hartley: 78.6% Fibo HA or 1.27 BC
5) Butterfly: 161.8% Fibo (below X) OR 1.618 BC
6) Deep Crab: 161.8% Fibo (below X) OR 2,618 BC.

How to trade?

It is necessary to open a position at the level, on a confirmation signal or on an impulse breakdown, using pending orders at Fibo levels.
Confirmation – in this case, you should wait for the reversal candlestick pattern at the Fibonacci level. Breakdown – in this case, the price bounces off the Fibonacci level and breaks through the trend line in the expected direction.

It is worth paying attention to the following clarifications: trading on wave B goes in the direction of the trend, but with a limited purpose (on the letter C). Wave C trading is counter-trend trading, but with a good profit-to-risk ratio (with a goal on the letter D). Trading on the letter D can be considered as trading in the direction of the trend (very close to the support and resistance levels) and also with a good profit-to-risk ratio (the target can be the top in an uptrend, the bottom in a downtrend or any Fibonacci level of the CD segment).

These patterns are quite common, and the success rate is quite high.
Use the patterns correctly and they will bring you a lot of profit.
Good luck!

Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻