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Bullish Gartley Stop Loss

The key to any trade execution is determining in advance the amount you are willing to risk. Defining the "uncle point," or stop loss limit, is crucial in containing losses and preserving equity capital. A stop loss limit in harmonic trade set-ups is really the point at which you believe the potential reversal zone is no longer valid. Harmonic trade set-ups are effective because they define a high probability area for trend reversal. Once that area is defined, the point at which the set up is no longer valid is fairly clear.

The stop loss limit in this pattem is measured relative to the initial point (X) of the defined pattem. In a bullish Gartley, the stop loss should be placed just below the initial point (X).

bulush gartley: stop loss just below point x!

Although the price action can retest the extreme point at X, the stock must reverse above this key area for the pattem to be valid. So, it is very important to examine the price bars in this area and be wary of any potential waming signs that might invalidate the pattem.



Ideal Bullish Gartley

The ideal bullish Gartley has specific Fibonacci retracements that are essential to define a valid pattem. In my opinion, the .786 is the most important number in the potential reversal zone. Although there are several other harmonic calculations that define the potential reversal zone, I believe the .786 is the most important number in the pattem because it is a projection off the largest price leg.

ideal bullish gartley buy at point d!

Another very important harmonic calculation is the completion point of the AB=CD. I consider this entry point to be a minimum requirement for a trade to be executed. The AB=CD completion point is useful because it should nicely complement the area of the .786 of the XA leg. Lets look at some examples of ideal bullish Gartley pattems.



Wells Fargo formed this bullish Gartley that was extremely harmonic. There were several numbers converging within less than a point and a half -between 31 15/16 and 33 5/16.

WELLS FARGO (WFC): DAILY BULLISH GARTLEY

©Big.Chart£.corri

42 40 38 36 34 32 30 28

There were three harmonic calculations that clearly defined the potential reversal zone. The stock possessed a nice AB=CD pattem. Although the CD leg was slightly extended, the distance of the two legs was relatively close. The AB leg was 7 1/8 points, while the CD leg was 8 5/16. The completion point of AB=CD was projected at 33 5/16. The .786 retracement of XA was calculated at 32 1/8. The 1.27 projection of was locatedjustbelow32at31 15/16.



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