Ok so from the last post, what I want to conclude, is that we are going to look for a Gartley structure, but not and isolated one, but one with a clear Elliot Wave definition.
Remember that not all gartleys fit within an Elliot Wave structure, but we are going to use the ones that actually do.
This is one of the special key characteristics of this method that will give us a better probability of identifying trend continuations.
The XA of our Gartley, should be an identifiable 12345 impulsive Ew.
The AB of our Gartley, should be an identifiable wave A correction.
The BC of our Gartley, should be an identifiable wave B correction.
The CD of our Gartley, should be an identifiable wave C correction.
Again, if this sounds complicated, wait until I put it all together. This will make sense once we take a look at real life examples.
I try to keep things simple, but honestly market timing has been the most difficult part. So regarding this I mainly use the basic range of fib time retracements, and pattern symmetry.
Anyway I’m sure you’ll be taking profits in your live account pretty soon.
One of the tools I underestimated when I first started studying Forex was Fibonacci levels.
Well I’m glad I took a second look at them. How great they are!
Fibonacci levels help us identify very narrow potential zones of support and resistance. In fact, the support and resistance areas indicated with Fibonacci levels are not different from those done by price itself.
So if you identify a support or resistance line, and then you draw a fibonacci retracement from X to Y, more often than not you’ll find that a fibonacci level lands in your line.
For the purpose of this method, we are going to look for the convergence of two fibonacci levels (at least), to identify strong narrow zones of support/resistance.
At the same time, we are going to construct and give shape to our gartleys based on fibonacci levels.
Before I continue with the precise use of the tool, I want you to configure your fibonacci tool with the next crucial levels for our trading:
Now that we have drawn our B to A fib levels, you identify the next swing high, that is your leg BC and then, you move your BA fib levels to the top of C to project the possible completion of D.
If you’re following this thread in real time, you can watch your Eur/usd daily chart right now, that’s the one being used for this particular example.
Ok once we have our two fib tools in our chart, we look for fib levels that land in the same area, fib levels that converge. Those levels are going to show us the potential zone of trend change/continuation.
In this particular example, we have two visible convergences.
38.2% XA converges with 50% CD.
61.8% XA converges with 118% CD (Thick purple horizontal line)
One important notice here is that CD must be at least 100% of AB, so in this example we automatically rule the first convergence out.
Our convergence tells us that the possible end of D will be at the convergence of 61.8% XA with 118% CD, which in this case price has already reached that level.
This particular chart is use for illustrative purposes, I’m not suggesting anyone to go long on Eur/usd based just on that.
Obviously price has found support on that particular area, and that is what we are looking for.
If we zoom out the chart, we can see that our convergence has worked as support and resistance in the pair before. We can confirm our suspected D’s by projecting different fib levels from different extreme points. But that just will work for confirmation.
Ok once you have spotted your gartley and your key fib levels, you can rid off of your drawings if you want, but wait, what do we have if you use your gartley tool?
We can find convergences in every XA fib retracement level, but that doesn’t necesarily mean that all are great.
When looking for XA retracements, here are some key levels for your consideration.
Ideal convergences happen no least than 38.2% XA, and no more than 78.6% XA
50% and 61.8% are the ones that tend to work better, but that’s not always true.
38.2% and 78.% although they do tend to work, they more than likely are to be temporary support and resistance zone, they don’t always suppose trend reversals/continuations.
Either way if we follow the criteria to choose a possible great quality trade set up, at least we should expect a temporary reaction at that level wich, if it happens to be a fake out, we still could get out of the market at breakeven.
Ok I need to eat! I think that’s pretty much what we need to know regarding fib levels.
I’ll continue with the last aspect later, so we can put it all together and start sharing examples.
This looks great. I’ll read it all over again to digest it all in a bit, food for me too haha!
One question I have for you however; feel free to answer after you finish the last part if you wish:
I notice you’re using Dealbook360 (if I’m not mistaken) however being with MT4, is there any way I can draw gartleys? I’m not sure about this, any insight is greatly appreciated. Thanks!
Hope you don’t mind me answering this…you can insert 2 triangles to give the same effect. For the first triangle you click on the XAB points, and the 2nd triangle would be the CD and possible D points. Then you can colorize them how you want.
I’ve never heard about gartleys! And I really base my trades on the EW trending? I use a thick mix of almost everything, and this will make the perfect seasoning - I’m all eyes and its 0300local. Please include something about the wave period timing and fibo time, and the logarithmic graphing for wave interpretation some tough EW gurus use over at AF.
:eek:They have a button for triangles on MT4 – that too is a new one.
Lol I was about to suggest the use of trendlines to draw the gartleys! That’s how I drew them before I ever noticed the gartley tool in my platform :D, but certainly a triangle tool is way more easy.
If you’re already into Elliot Wave certainly gartleys are going to give you some good perspective about trend continuation.
About the logarithmic graphing…well…you lost me!
Regarding Elliot Wave I use it in its very basic conception just to try to spot the position of the market, that’s it, no more.
So you probably are more experienced than me in this field and can share with us your knowledge, that would be great, this is a place for us to learn, so feel free to give your comments.
As I said before I keep things in a very basic level that has worked for me really well. Hope I can finish posting the last part of the method by tomorrow so we can put it all together.
The math part is easier if you’ve got a background in some math related science - such as physics, advanced math, computer science etc. I for one find it really easy to understand it as I’m still in uni studying computer science. Anyways, if you’re having trouble shoot me a PM and I’ll help you with some notes I wrote down that will surely make it easier to understand.
.