FinanceGlossy

The beauty of the original Gartley pattern comes from the money management system involved. Money management with Gartley allows for hefty 1:3, 1:4 or even more as risk-reward ratios. If you want a Fibonacci and Gartley approach, look for no swing above 61.8% of the previous move lower. The series of lower highs overwhelms. Bulls look trapped.

Gartley labeled this segment A-B. The longest in the pattern. And then, suddenly, bulls catch a bid. This is the B-C segment.

How do we know this bounce matters? The answer comes from the A-B characteristics: the lower highs series gets broken by the B-C segment.



Larry Pesavento took Gartley’s original work to a new level. Because of him, the Gartley 222 pattern became a well-known harmonic pattern today.

The “Gartley 222” method as described by Pesavento derives its name from the page no. 222 from the original Harold’s Gartley’s book.

The most simplistic representation of the Gartley 222 pattern looks like this:



Carney was a student of Pesavento. He didn’t like to leave to many possibilities for the retracement levels, so he worked on finding a better approach.

Carney’s approach to harmonic trading was made public at the turn of the century. His approach uses specific Fibonacci ratios between the Pesavento’s Gartley 222 pattern.



Traders need to know that harmonic patterns work best with a sound money management system. Before defining the target, one must deal with the potential loss.

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