As of 06/01/2020
Indus: 25,475 +91.91 +0.4%
Trans: 8,966 3.88 0.0%
Utils: 815 +8.41 +1.0%
Nasdaq: 9,552 +62.18 +0.7%
S&P 500: 3,056 +11.42 +0.4%

YTD
10.7%
17.8%
7.3%
+6.5%
5.4%

27,000 or 24,000 by 06/15/2020
9,800 or 8,200 by 06/15/2020
850 or 750 by 06/15/2020
9,800 or 9,000 by 06/15/2020
3,200 or 2,850 by 06/15/2020

As of 06/01/2020
Indus: 25,475 +91.91 +0.4%
Trans: 8,966 3.88 0.0%
Utils: 815 +8.41 +1.0%
Nasdaq: 9,552 +62.18 +0.7%
S&P 500: 3,056 +11.42 +0.4%

YTD
10.7%
17.8%
7.3%
+6.5%
5.4%
 
27,000 or 24,000 by 06/15/2020
9,800 or 8,200 by 06/15/2020
850 or 750 by 06/15/2020
9,800 or 9,000 by 06/15/2020
3,200 or 2,850 by 06/15/2020
 
Statistics updated on 4/8/2020.
The Gartley pattern is named after its founder H.M. Gartley. It's sometimes known as the Gartley 222 because it appeared on page 222 of his book, Profits in the Stock Market, published in 1935. I programmed my computer to automatically find this pattern and tested how well the pattern works. I split the Gartley pattern into two articles. This article discusses the bullish Gartley, the variation with an upward breakout.
Let me also say that I have not read Gartley's book, so details of this pattern are based on Internet sources.
Bullish Gartley

Overall performance rank for up/down breakouts (1 is best): 18 out of 48/18 out of 46
Break even failure rate for up/down breakouts: 12%; 24%
Average rise/decline: 44%; 15%
Throwback/pullback rate: 64%; 60%
Percentage meeting price target for up breakouts: 58% (based on the full height of the pattern)
The above numbers are based on more than 1,900 perfect trades. Downward breakouts measure the drop below the bottom of the pattern. Upward breakouts measure the rise above the top of the pattern, not above D. See the glossary for definitions. 
The Gartley pattern is complex because it deals with Fibonacci ratios. Trying to find it without a computer or calculator is a difficult exercise.
The chart pattern can be classified as a variation of a measured move down. The A and C tops look like an ugly double top, too.
Having so many rules makes the pattern rare. Here are the traditional identification guidelines for the pattern.
Characteristic  Discussion 
The Bullish Gartley Retraces

XA  Price rises from X (see figure on the right, not drawn to scale) to peak at A. This is typically a large upward move to accommodate the retraces that follow.  
AB  Price retraces from the peak A to valley B about 61.8% of the XA move.  
BC  After bottoming at B, price climbs to C. The BC move retraces 61.8% or 78.6% of the AB drop. For testing, I chose to interpret this as a range of acceptable values.  
CD  The final leg of the pattern sees price drop from peak C to the valley at D. The CD move is 127% or 161.8% of the BC move. For testing, I chose to interpret this as a range of acceptable values.  
Invalid  If price drops below X on the way to finding D, then the pattern should be ignored. 
Trading Tactic  Explanation 
The Measure Rule

Buy  Once price turns at D, buy. That's the problem with trading this pattern. How do you know the stock has completed the turn at D? For an estimate of the turning price, use the BC move. CD should be 127% or 162% longer than BC, but be flexible since it rarely holds true.  
Stop  I chose a close below X as the stop location but once turn D is in place, that could serve as a closer stop.  
Swing Trade measure rule  The target price zone is between valley B and peak A. The associated figure shows how often price reaches those targets, based on stats from June 2019.  
Tradition measure rule  Compute the height from the peak at A to the low at X. For upward breakouts, add the height to the price of A. For downward breakouts, subtract the height from X. 
June 2019 testing showed that 44% of the Gartley's I looked at continue lower, closing below X to stage a downward breakout. Thus, buying at turn D is can risk failure 44% of the time. I show those numbers in the chart above.
I measured the rise from the low at D to either a 20% trend change (price drops 20% from a peak) or closes below X.
I found that 94% of the patterns I looked continued up to B, 54% hit C, and 46% reached A.
As of April 2020, updated stats show the pattern's price after D (for those which turned upward) reaches B 98% of the time, hits C 59% of the time, and A 45% of the time. The 44% breakout downward is unchanged.
Let's take a look at a trading example.
I show the Gartley on the daily chart of Abaxis. X is at 31, A is at 40.60, B is at 34.70, C is 38.60 and D is 33.30.
The AB retrace of XA is 62%. The BC/AB climb is 67%, about mid range between 61.8% and 78.6%. The CD/BC move is 135%, toward the low end of the 127% to 161.8% range.
After D, the stock moves up slowly before running out of data. In other words, the "ultimate high" (see the glossary) has not been found yet.
The gain so far has peaked at 45% above the low at D.
Notice how choppy the Gartley appears when compared to the idealized figure at the top of this article. That's typical for long patterns.
Would you be able to spot this as a Gartley if the labels were not attached?
 Thomas Bulkowski
See Also

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