USING GARTLEY PATTERNS TO SET UP SHORTS

By Robert Frencham
H M Gartley created this strategy in 1935 in the middle of the Great depression and the
cost of his book was a staggering $1500 per copy. There are two types the bullish below and
the bearish and I will explain the bullish as used in a real trade in Woodside this week. The first
task is to establish point X to point A and this can be achieved by pointing your fib retracement
from point X to point A as shown below

This has produced a starting point for point B to place the Fib cursor and expand up to
point A as shown below this is known as the intimal reaction The B to C leg above this the math
leg this should produce the swing point from we short the stock .

Next the price will decline from here and this is our Risk Reward set up where I look for a
profitable outcome. Point D is located by either deducting point A from point B or in metastock
copy the trend line A to B and take the line up to C place it at c point and the length will find
point D and this is at either the 127.0 or 161.0 extension fib point. This is the aiming point. As
this is bullish pattern the stock may find support but for now in shorting for a quick return using a
mini warrant with an exposure of no more than $6.8250 and a reward of 20 % 5.1 Reward.

The Gartley has a lot of support and is a common tool with FX currency traders but I like
the idea of where the buy zone is and where the buyers are waiting this is a basic example but
there are many trades that may set up with this advantage can be profitable. Set stops around
34.50 in my situation 0.5 R losses for my risk. The odds of this trade have increased as the
macd has crossed 0 into negative creating divergence this what new traders should look at as is
what tricks you when you dont pay attention to detail when finalising the trade for entry. I hope
this helps and there is abundance of information on line and was watching a webinar on
Gartleys and their application and how they can be used in our market. The fun part is drawing
in the Butterflys but it will clutter up the chart and in this case I left it out.

SUBJECT SUMMARY
THE GARTLEY PATTERN
The Gartley pattern was outlined by H.M. Gartley in his book Profits in the Stock Market,
published in 1935. Although the pattern is named "The Gartley," the book did not discuss specific
Fibonacci retracements! It was not until "The Harmonic Trader" was released that the specific
retracements of the B point at a .618 and the D point at a .786 were assigned to the pattern. There are
others who have assigned Fibonacci retracements to this framework. However, they use a variety of
Fibonacci numbers at the B and D points. Despite these variations, the Fibonacci retracements that yield
the most reliable reversals are the .618 at the B point and the .786 at the D point. Furthermore, the
pattern should possess a distinct AB=CD pattern that converges in the same area as the 0.786 XA
retracement and the BC projection (either 1.27 or 1.618). The most critical aspect of the Gartley is the B
point retracement, which must be at a 0.618 of the XA leg.