Gartley 222 Pattern #5

Gartley 222 Pattern #5

1. The time frame between point X and point A will be between 5 and 13 time bars (i.e., 5 min., 30 min., or daily). On rare instances 21 time bars. These are Fibonacci numbers.

2. There are no swing patterns present between points 1 and A.

3. When the move from X to 1 is very explosive, the pullback to point A may only retrace to 38.2% or 50% IX.

4. If the price difference between the .618 and .786 retracement is greater than the trader is willing to risk, the trader should wait for further confirmation (i.e., a change in momentum or candlestick pattern: doji, hammer). In the S&P 500, for example, if the difference between the •618 and .786 numbers is greater than 1.70 points, I will wait for further confirmation to enter the trade.

5. Time periods, the next swing will usually be dramatic to the downside. If the time frame down from point 1 to A is longer than 8 periods, the ensuing pullback will most likely be less dramatic.

6. The trader will never know which of the retracement numbers the market is going to reach. It is the trader's decision to determine how much risk is in the trade.

7. This pattern forces you to trade with the short term trend. You are not trying to pick a top or bottom.

8. After entry, once prices move 61.8% in the direction of the trend, the protective stop should be moved to point A. This gives a risk free trade.

9. The minimum price objective should be the same distance from point A to 1.