The Cable is about to complete a Gartley pattern at 1.3210-1.3222 price zone as the 24 July GBPUSD harmonic pattern analysis below shows.
Harmonic patterns take Fibonacci ratios from specific points to form a probable price reversal zone. The pattern could precede a minor or major correction or even a change of trend. Thus, GBPUSD is about to complete a Gartley harmonic pattern as the chart below shows.In the last Butterfly pattern spotted on GBPUSD, price did just as expected.
GBPUSD Gartley pattern: what's the price reversal zone?
Charting and harmonic tool from TRADINGVIEW
The first leg XA ran from 1.3267 to 1.2958. Leg AB corrects XA at 64.6% (slightly more than the 61.8% required for a Gartley). BC corrects AB at 44% which works well for Gartley (Gartley takes anywhere from 38.2% to 88.6%). The last leg is often a confluence of XA correction at 78.6% and BC extension at anywhere between 113% to 161.8%. To complete this pattern, the last leg, CD should continue to 1.3202 (78.6% correction of XA). At 1.3202 as well, the extension of BC is 149.5% (which falls between 113% to 161.8% required). So we can have a perfect Gartley at 1.3202 . I personally like having a price zone for the reversal. At 161.8%, BC extension ends at 1.3210. 1.3202 is pretty close to 1.3210, therefore we have our price reversal zone at 1.3202-1.3210. In summary, a Gartley pattern could complete at 1.3202-1.3210 price zone.
How to trade this setup
There are different ways to trade Gartley pattern depending on the users preference. The following looks at a few methods.
Method 1: Sell anywhere at the reversal zone with stop loss at 30-40 Pips above the reversal zone. Target can range from 1:1 to 1:5.
Method 2: Waiting for the pattern to complete and sell at about 20-30 pips below 1.3202 with stop loss at 10 pips above 1.3210. Target can range from 1:1 to 1:5.
Method 3: Waiting for the pattern to complete and wait for a reversal signal. The reversal signal can be from any other technical methods.
INVALIDITY: This setup will be invalid if price breaks away from 1.3202-1.3210 zone or it dips below 1.2958 before hitting the reversal zone.
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