1. Price swing from A to B will be equal to CD 60% of the time. The other 40% of the time CD will be 1.27 or 1.618 of AB.
2. The BC price swing will be .618 or .786 of the AB move. In very strongly trending markets the BC swing will only be at the .382 retracement.
3. If the AB swing is very strong, it will give a good clue as to what to expect on the BC move.
4. The time bars from point A to B should be equal to the CD time bars about 60% of the time. The other 40% of the time these time periods will expand to 1.27 or 1.618 of AB.
5. Should the CD price swing have a price gap or a very wide range bar, the trader should interpret this as a sign of extreme strength and expect to see price expansions of 1.27 or 1.618.
Gartley 222 Pattern #2
1. Price swing from A to B will be equal to CD 60% of the time. The other 40% of the time CD will be 1.27 or 1.618 of AB.
2. The BC swing will be .618 or .786 of the AB move. In very strongly trending markets the BC swing will only be at the .382 retracement.
3. If the AB swing is very strong, it will give a good clue what to expect on the BC move.
4. The time bars from point A to B should be equal to the CD time bars about 60% of the time. The other 40% of the time these time periods will expand to 1.27 or 1.618 of AB.
5. Should the CD price swing have a price gap or a very wide range bar, the trader should interpret this as a sign of extreme strength and expect to see price expansions of 1.27 or 1.618.
Gartley 222 Pattern #3
1. The swing down from point A will terminate at point D. This will be at the .618 or .786 retracements 75% of the time. The other 25% of the time, the retracements will be .382, .500 or .707.
2. There must be an AB = CD pattern observed in the move from A to D.
3. The BC move will be .618 or .786 of AB. In strongly trending markets expect a .382 or .500 retracement.
4. Analyze the time frames from point X to A and A to D. These time frames will also be in ratio and proportion. For example, the number of time bars up from point X to A is equal to 17 bars. The time bars from A to D equal 11. Seventeen is approximately 1.618 of 11.
5. There will be a few instances where the AB = CD move will give a price objective at point X. This will be a true double bottom formation.
6. If point X is exceeded the trend will continue to move down to at least 1.27 or 1.618 of the X to A move.
Gartley 222 Pattern #4
1. The swing up from point A will terminate at point D. This will be at the .618 or .786 retracements 75% of the time. The other 25% of the time, the retracements will be .382, .500 or .707.
2. There must be an AB = CD pattern observed in the move from A to D.
3. The BC move will be .618 or .786 of AB. In strongly trending markets expect a .382 or .500 retracement.
4. Analyze the time frames from point X to A and A to D. These time frames will also be in ratio and proportion. For example, the number of time bars down from point X to A is equal to 17 bars. The number of bars from A to D is 11.
5. There will be a few instances where the AB = CD move will give a price objective at point X. This will be a true double top formation.
6. If point X is exceeded the trend will continue to move up to at least 1.27 or
1.618 of the X to A move.
Gartley 222 Pattern #5
1. The time frame between point X and point A will be between 5 and 13 time bars (i.e., 5 min., 30 min., or daily). On rare instances 21 time bars. These are Fibonacci numbers.
2. There are no swing patterns present between points 1 and A.
3. When the move from X to 1 is very explosive, the pullback to point A may only retrace to 38.2% or 50% IX.
4. If the price difference between the .618 and .786 retracement is greater than the trader is willing to risk, the trader should wait for further confirmation (i.e., a change in momentum or candlestick pattern: doji, hammer). In the S&P 500, for example, if the difference between the •618 and .786 numbers is greater than 1.70 points, I will wait for further confirmation to enter the trade.
5. Time periods, the next swing will usually be dramatic to the downside. If the time frame down from point 1 to A is longer than 8 periods, the ensuing pullback will most likely be less dramatic.
6. The trader will never know which of the retracement numbers the market is going to reach. It is the trader's decision to determine how much risk is in the trade.
7. This pattern forces you to trade with the short term trend. You are not trying to pick a top or bottom.
8. After entry, once prices move 61.8% in the direction of the trend, the protective stop should be moved to point A. This gives a risk free trade.
9. The minimum price objective should be the same distance from point A to 1.
Gartley 222 Pattern #6
1. The time frame between point X and A will be between 5 and 13 time bars (i.e., 5 min., 30, or daily). On rare instances 21 time bars.
2. There are usually no swing patterns present between points 1 and A.
3. When the move from X to 1 is very explosive, the pullback to point A may only retrace to 38.2% or 50% of IX. 4. If the price difference between the .618 and .786 retracement is greater than the trader is willing to risk, the trader should wait for further confirmation (i.e, change in momentum or candlestick pattern; doji or hammer). In the S&P 500, for example, if the difference between the .618 and .786 is greater than 170 points I will wait for further confirmation to enter the trade.
5. The time bars between points X and A give a strong clue to the next swing. When the distance from point A is very short, 3 to 5 time periods, the next swing will be explosive to the upside. If the time frame down from point 1 to A is longer than 8 periods, the ensuing rally will most likely not be as strong.
6. The trader will never know which of the retracement numbers the market is going to reach. It is the trader's decision to determine how much risk is in the trade.
7. This pattern forces you to trade with the short term trend. You are not trying to pick a top or bottom.
8. After entry, once prices move 61.8% in the direction of the trend, the protective stop should be moved to point A. This gives a risk free trade.
9. The minimum price objective should be the same distance as point X to 1.
Gartley 222 Pattern #7
1. The time frame between X and point A will be between 5 and 13 time bars (i.e., 5 min., 30 min., daily). On rare occasions 21 time bars.
2. This is a reversal or extension pattern. Expect prices to reverse at point A.
3. If the dollar amount between the 1.27 price and 1.618 price is too great, the trader should wait for more confirmation (i.e., doji or hammer or another indica tor) of an exhaustion move.
4. The thrust down from 1 to A will give a good clue what to expect. If prices get to the 1.27 within 5 bars or less prices will most probably extend to the 1.618.
5. There should be no price swings between point 1 and point A. If there is a price swing Pattern #6 becomes a Gartley 222 pattern.
6. This is a very important pattern when day trading because point X is often the opening price of the day.
7. When prices react in the direction of the trade, the protective stop should be raised to break even.
8. Profit objective should be the total distance between points 1 and A.
Gartley 222 Pattern #8
1. The time frame between X and point A will be 5 and 13 time bars (i.e., 5 min., 30 min., daily). On rare occasions 21 time bars.
2. This is a reversal or extension pattern. Expect prices to reverse at point A.
3. If the dollar amount between the 1.27 price and 1.618 price is too great, the trader should wait for more confirmation (i.e., doji or hammer or another indicator) of an exhaustion move.
4. The thrust up from 1 to A will give a good clue what to expect. If prices get to the 1.27 within 5 bars or less prices will most probably extend to the 1.618.
5. There should be no price swings between point 1 and point A. If there is a price swing, Pattern #6 becomes a Gartley "222" pattern.
6. This is a very important pattern when day trading because point X is often the opening price of the day.
7. When prices react in the direction of the trade, the protective stop should be raised to break even.
8. Profit objective should be the total distance between points 1 and A.
Gartley 222 Pattern #9
1. The pattern should be easily identified. If you have to force the numbers, it is probably not this pattern.
2. Symmetry is the key to this pattern. Points 2 and 3 should be 1.27 or 1.618 price expansions of the A and C swings.
3. The time frames from point A to 2 and C to 3 should be symmetrical.
4. If there is a big price gap in this pattern at any time it is a sign that the 3 drive pattern is wrong and the trader should wait for further confirmation that a top is in progress.
5. Price swings A and C will usually be at the .618 or .786 retracement of the previous swing. When the market is a vertical (blow off) pattern, these retracements will only be .382.
6. Three drives to a top is a rare pattern. After you start to see this patttern, it will be much easier to interpret. Don't search for the pattern, it should jump out at you as you study the chart.
Gartley 222 Pattern #10
1. The pattern should easily be identified. If you have to force the numbers, it is probably not this pattern.
2. Symmetry is the key to this pattern. Points 2 and 3 should be 1.27 or 1.618 price expansions of the A and C swings.
3. The time frames from point A to 2 and C to 3 should be symmetrical.
4. If there is a big price gap in this pattern at any time it is a sign that the 3 drive pattern is wrong and the trader should wait for further confirmation that a bottom is in progress.
5. Price swings A and C will usually be at the .618 or .786 retracement of the previous swing. When the market is in a free fall (exhaustion) these retracements will only be .382.
6. Three drives to a bottom is a rare pattern. After you start to see this pattern, it will be much easier to interpret. Don't search for the pattern, it should jump out at you as you study the chart.
