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.
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