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 you go long at D. A bearish harmonic forms during a rally in a downtrend (or at the top of an uptrend), and you go short 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 most important 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 the most popular harmonic pattern 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.
How Charted Helps With Harmonic Patterns
Screenshot a chart and Charted scans for harmonic structures (Gartley, Bat, Butterfly, Crab, plus less common variants like Cypher and Shark), validates the Fibonacci ratios at each pivot, marks the X, A, B, C, D points with specific values, and produces the trade setup (entry zone, stop loss, three targets, R/R math). Useful for traders who want to verify pattern validity quickly without measuring every ratio by hand.
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 low-edge 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 is a much higher conviction trade than the Gartley alone.
**Trading without a confirmation candle.** Entering on PRZ touch with no confirmation works for some traders, but most studies show better results when waiting for a reversal candle (pin bar, engulfing, hammer) at the PRZ. The confirmation costs you a small entry slip but increases hit rate substantially.
This content is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.