Harmonic patterns are the most precise pattern category in technical analysis — they require specific Fibonacci ratios at each pivot to qualify, which means there's no judgment involved in whether a pattern is "valid." Either the ratios fit within tolerance, or they don't. The discipline is what makes harmonics powerful: traders who follow the rules don't get lured into low-quality setups.
Direct Answer: How to Identify Each Pattern
A harmonic pattern is a five-point structure (X, A, B, C, D) that forms an XABCD shape on the chart. The differences between Gartley, Bat, Butterfly, and Crab come down to where point D lands relative to point X:
- **Gartley:** D ends at the 78.6% retracement of XA (D is INSIDE the XA range)
- **Bat:** D ends at the 88.6% retracement of XA (D is INSIDE the XA range, deeper than Gartley)
- **Butterfly:** D ends at the 127% extension of XA (D is OUTSIDE the XA range — pattern extends beyond X)
- **Crab:** D ends at the 161.8% extension of XA (D is FAR OUTSIDE the XA range — most aggressive extension)
All four patterns also require specific ratios at the AB and BC legs. The setup completes at point D — that's the **PRZ** (Potential Reversal Zone), the entry trigger. The trade direction is opposite to the prior leg: a bullish harmonic forms during a pullback in an uptrend (or at the bottom of a downtrend), and traders look for a long entry at D. A bearish harmonic forms during a rally in a downtrend (or at the top of an uptrend), and traders look for a short entry at D.
The Anatomy: X, A, B, C, D Points Explained
Every harmonic pattern follows the same structure:
- **X to A:** the initial leg (impulse). Sets the pattern's reference range.
- **A to B:** the first retracement. The depth of B determines which pattern is forming (Gartley/Bat use 61.8%; Butterfly/Crab use deeper retracements).
- **B to C:** the second leg, in the direction of XA. Must NOT exceed point A.
- **C to D:** the final leg, in the direction of AB. D is the completion point — the PRZ.
The pattern is bullish if X is high and A is low (downward XA); bearish if X is low and A is high (upward XA). A bullish pattern produces a long entry at D, expecting a rally back toward A. A bearish pattern produces a short entry at D, expecting a decline back toward A.
Gartley (1935 Pattern)
Originally described by H.M. Gartley in his 1935 book "Profits in the Stock Market," the Gartley is the original harmonic. The exact ratios:
- AB = 61.8% retracement of XA
- BC = 38.2% to 88.6% retracement of AB
- CD = 127% to 161.8% extension of BC
- D = 78.6% retracement of XA (the key ratio)
Most traders accept a tolerance of plus/minus 1-2% on the 78.6% level (so 76.5% to 80% is the practical range). If D lands within tolerance and the AB and BC ratios fit, you have a valid Gartley.
The Gartley is the most conservative harmonic pattern. The 78.6% retracement is shallow enough that price has rallied less far against the prior trend, making the reversal probability higher. Stop loss for a bullish Gartley typically goes 1-2% below point X.
Bat (Scott Carney, 2001)
The Bat pattern was introduced by Scott Carney in 2001 and is now widely used in active trading. The exact ratios:
- AB = 38.2% to 50% retracement of XA (shallower than Gartley)
- BC = 38.2% to 88.6% retracement of AB
- CD = 161.8% to 261.8% extension of BC
- D = 88.6% retracement of XA (deeper than Gartley)
The 88.6% retracement at D is the defining ratio — it's the Bat's "thumbprint." Practitioners often look for D to land within 87% to 90% of XA.
The Bat tends to produce sharper reversals than the Gartley because point D sits closer to point X — the pattern is "deeper" and the reversal momentum is often stronger. Stop loss typically sits 1-2% beyond X. Risk is small because D is close to X, which produces good R/R when the pattern works.
Butterfly (Bryce Gilmore, 1990s)
The Butterfly is the first of the "extension" harmonics — point D extends BEYOND point X rather than retracing inside the XA range. The exact ratios:
- AB = 78.6% retracement of XA
- BC = 38.2% to 88.6% retracement of AB
- CD = 161.8% to 261.8% extension of BC
- D = 127% extension of XA (typically tolerated at 127% to 161.8%)
The Butterfly forms when the AB leg is unusually deep (78.6% retracement of XA, much deeper than the Gartley/Bat 38-61.8%), and the CD leg overshoots point X. The visual signature is asymmetric — the AB leg is steep and the CD leg is even steeper.
Butterflies appear at major trend reversal points — often at multi-month or multi-year highs/lows. The pattern is "rare but powerful" because the deep AB and the X-overshoot at D require specific market dynamics. Stop loss is typically placed 1-2% beyond the 161.8% extension (in case of a Crab forming instead of a Butterfly).
Crab (Scott Carney, 2000)
The Crab is the most aggressive extension harmonic — D extends to 161.8% of XA. The exact ratios:
- AB = 38.2% to 61.8% retracement of XA
- BC = 38.2% to 88.6% retracement of AB
- CD = 224% to 361.8% extension of BC
- D = 161.8% extension of XA
The 161.8% extension at D is the Crab's defining ratio. Carney introduced the Crab specifically to capture the "extreme overshoot" that occasionally happens at major reversals — when a market runs far past where most traders expect resistance, then snaps back violently.
Crabs often produce the largest reversals of any harmonic pattern because the overshoot to 161.8% means many short-term traders have committed to the trend and will be forced to cover when reversal kicks in. Stop loss typically sits at 200% extension or above (to allow for further overshoot before invalidation). The R/R on a successful Crab is the highest of the four patterns — often 3:1 or better.
The Trade Setup: Entry, Stop, Target
For all four patterns, the trade structure is similar:
**Entry:** at point D (the PRZ). Some traders use a confirmation candle (a reversal pin bar or engulfing candle) before entering; others enter on touch of the PRZ with a tight stop.
**Stop loss:** - Gartley/Bat (D inside XA): stop 1-2% beyond point X - Butterfly: stop 1-2% beyond 161.8% extension - Crab: stop 1-2% beyond 200% extension
**Target 1:** point C (the prior pivot before D) **Target 2:** point A (the second prior pivot) **Target 3:** point B (61.8% retracement of CA, often a Fibonacci confluence zone)
Many traders scale out: 50% off at Target 1, 30% off at Target 2, 20% trailing stop on the remainder. R/R is typically 1:2 at Target 1 alone, scaling to 1:5 or better if the move runs to Target 3.
Worked Example: Bullish Bat Pattern Setup
A stock starts at $50 (point X), rallies to $80 (point A). It pulls back to $66 (38.2% retracement of XA, point B). It rallies again to $74 (61.8% retracement of AB, point C — note AB and BC ratios fit Bat parameters). It then declines to $54 (88.6% retracement of XA, point D — the Bat completion).
Bat ratios checked: AB = 47% (within 38.2% to 50% tolerance), BC = 57% (within 38.2% to 88.6%), CD = 250% extension of BC (within 161.8% to 261.8%), D at 88.6% of XA. Pattern confirmed.
Entry: long at $54 (PRZ touch). Stop: $48 (2% below X at $50). Target 1: $74 (point C, prior pivot). Target 2: $80 (point A). Risk: $6. Reward at Target 1: $20. R/R = 3.3:1.
Checking the Chart with Wyck
Measure the harmonic ratios yourself, then upload the chart to Wyck for a read of the trend and the support and resistance levels around the PRZ.
Common Pitfalls
**Forcing a pattern.** Harmonic ratios must fit within tolerance. If AB is 70% of XA, it's not a Bat (50% max) and it's not a Gartley (61.8% target) — it's nothing. Forcing the pattern into ambiguous ratios produces unclear setups. Either the ratios fit, or you skip the chart.
**Using too tight a tolerance.** Some traders demand exact 88.6% on a Bat — but real markets rarely produce exact Fibonacci levels. A reasonable tolerance is plus/minus 1-2% on each ratio. Within those bounds, the pattern is valid; outside, you skip.
**Ignoring confluence.** The best harmonic setups have additional confluence at the PRZ — a major support/resistance level, a moving average, a trend line, a prior pivot. A Gartley completing at $54 that also coincides with the 200-day SMA at $54 and a horizontal support pivot at $54 has much more confluence than the Gartley alone.
**Trading without a confirmation candle.** Entering on a PRZ touch with no confirmation works for some traders, but waiting for a reversal candle (pin bar, engulfing, hammer) at the PRZ filters out many failed reversals. The confirmation costs you a small entry slip.
This content is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.