We have the Butterfly pattern
To trade a bearish Butterfly pattern, place your sell order at point D (the 127% Fibonacci extension of the X-A leg), position your stop loss just above the 161.8% extension of the X-A leg and place your profit target at either point A ( aggressive) or point B (conservative).
Short entry
Stop loss
Conservative profit target
Aggressive profit target
summary
In this lesson, you have learned that …
... the Butterfly is a reversal pattern that allows you to enter the market at extreme highs or lows.
... it is similar to the Gartley and Bat patterns but the final C-D leg makes a 127% extension of the initial X-A leg, rather than a retracement of it.
... to trade the Butterfly, enter the market with a long or short trade at point D of the pattern - the price should reverse direction here.
... place your stop loss just below (bullish trade) or above (bearish trade) the 161.8% Fibonacci extension of the X-A leg.
...for an aggressive profit target, place your take profit order at point A.
... for a more conservative profit target, place your take profit order at point B.
To trade a bearish Butterfly pattern, place your sell order at point D (the 127% Fibonacci extension of the X-A leg), position your stop loss just above the 161.8% extension of the X-A leg and place your profit target at either point A ( aggressive) or point B (conservative).
Short entry
Stop loss
Conservative profit target
Aggressive profit target
summary
In this lesson, you have learned that …
... the Butterfly is a reversal pattern that allows you to enter the market at extreme highs or lows.
... it is similar to the Gartley and Bat patterns but the final C-D leg makes a 127% extension of the initial X-A leg, rather than a retracement of it.
... to trade the Butterfly, enter the market with a long or short trade at point D of the pattern - the price should reverse direction here.
... place your stop loss just below (bullish trade) or above (bearish trade) the 161.8% Fibonacci extension of the X-A leg.
...for an aggressive profit target, place your take profit order at point A.
... for a more conservative profit target, place your take profit order at point B.
