Thread: Butterfly pattern definition

Butterfly pattern was discovered by Bryce Gilmore. Together with Gartley pattern Butterfly offers high probability change in market direction. Therefore really worth to study.

There are lots of butterfly diagrams all over internet. Most of them present what we could call Slow Butterfly version, see the following diagram.


More common and more reliable version of Butterly pattern is the aggressive butterfly pattern. See the following diagram and the difference in the time of the pattern swings. Examples that will follow will explain it even better.




For more info about Butterfly pattern and the confirmation methods see -> Butterfly pattern - table of content

Note the 2 possible Fibonacci extension price levels for the Butterfly pattern end. You may expect to see the D point on 127% XA retracement and on 161.8% XA retracement.
This actually makes butterfly more difficult pattern to trade.

Butterfly pattern with D point on 127% XA retracement:


Butterfly pattern with D point on 161.8% XA retracement:


Knowing two possible D point locations gives several ideas for building a valid trading strategy around it.