11 December 2010

Harmonic Trading 104 (The Butterfly Pattern )

As we begin to learn about the Butterfly Pattern.

I would like to say that it is not easy. And will take some time to fully comprehend the various Fibonacci rations that makes up each Harmonic pattern.*

If you are an average Joe trader such as myself. I suggest that you find a good Harmonics indicator to help with identifying these patterns in the live market. (And connect with more experienced Harmonic traders to help you on your journey.)*

Never trade with out a stop and use good money management.

So Lets Get Started!!!!


The Butterfly Pattern


The Butterfly is considered a reversal pattern. Especially when found at significant tops (Highs) and Bottoms (Lows)


An ideal Butterfly Pattern, has a Fibonacci ratio of a 0.786 retracement of the XA leg as the B point.

That forms an AB=CD pattern of an extended C.D. leg that is 1.27 or 1.618 of the AB leg.

D. will be below X. in a Bullish Butterfly and D. will be above X. in a Bearish Butterfly.

D. is the Bread and Butter point and projection level with the greatest profit potential if the pattern holds true.* Especially when found at significant tops (Highs) and Bottoms (Lows).





This image has been resized. Click this bar to view the full image. The original image is sized 645x355.




This image has been resized. Click this bar to view the full image. The original image is sized 782x351.


GFT-Butterfly-Bullish.pdf
GFT-Butterfly-Bearish.pdf

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