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Fibonacci Fractal Geometry
Welcome to the Fibonacci Fractal Geometry thread!
In here we will focus on trading using Fibonacci theory with a particular emphasis in what is variously called "Geometric patterns", "Pesavento patterns" and "Harmonic patterns". I'd rather honor the person who re-discovered the numeric sequence (Leonardo Fibonacci de Pisa); therefore I'm calling this patterns Fibonacci Fractals.
Without more adue, here's one Gartley/Butterfly combination that just finished forming in the EUR/USD pair. The time frame is 1H.
The signal is bearish.
I'll present these 2 Fibonacci Fractals separately in the next 2 posts.
The time now is 07:07PM Universal Time, date July, 15, 2009
good to see you here
Don't Chase the market let the market come to you
I share your view on the butterfly pattern, too. And I think the recent congestion or directionless price action of EUR/USD appears more like a zigzag or flat that might end up as a truncation 5. The trouble with pattern reading is that it can be anything one wants to see. Let's see how it plays out in the next few days or weeks. Patience is the best virtue.
I like your blog. Is there anyway to contact you on your blog?
Originally Posted by CodyB
Thanks CodyB, very nice to see you're doing good and in the game. Welcome to my little corner!
Originally Posted by Franosh
Franosh, welcome too! I can't argue with your EW view, that's not my forte, although I'm starting to draw some charts too. I just hope that the EUR drop some couple hundred pips before taking off or continue its sideways moves.
The comments and email features in my blog are disabled for the time being since I'm not around everyday for now. But drop by this thread now and then, and if you see me online we can chat some.
I'm posting shortly the Fibonacci ratios of the patterns from my first post.
EUR/USD more recent Gartley
This is the Gartley with the Fibonacci ratios of its waves. It's been already 2 days from its completion but fiber hasn't come down yet. In fact, after a little dip it went up and touched the 0.886 Fib resistance line before coming down. This isn't uncommon with this patterns: since cautious traders tend to place their stops around the next fib level from last top, that may act like a magnet for stop-hunting. A trader with deeper pockets could have tried the 100% resistance and be safer. Personally I thought placing the stop at 1.4200 would give me a poor R:R ratio in a pattern so small so I kept my stops tight (therefore being tripped in the stoploss squeeze up, lol). But I reloaded in the way down, and my stops are now at 1.4165, which imho if broken will really invalidate the Gartley pattern and might signal Euro continued strength.
That's the thing I like about these patterns, they give you very tight stops and limited risk. They may not work every time, but the ones that do give you very nice risk:reward ratios so it's worth trying.
EUR/USD smaller butterfly
The right wing of the Gartley already posted, if magnified, reveals a smaller pattern inside it: a butterfly. That's the beauty of these things: patterns within patterns, forming a vibrating hologram of energy waves in the market (hehe, no, I don't smoke anything, it's just that sometimes I get carried away... I'm really entusiastic about all this Fibonacci mystery). Since that's one of the characteristics of fractals, that's the reason I call these patterns Fibonacci geometric fractals or Fibonacci fractals for short. It seems to fit and define them well, imho.
Note: I'm not trying to "re-baptize" these patterns or appear like the one that discovered them. Nothing further from the truth (I just found the information and liked it). But since there already are several people (at least 3 last time I checked) claiming they "invented" them or discovered them first than the next guy, I didn't know if calling them Pesavento patterns, Harmonic patterns, Geometric patterns and so on... so to avoid presenting preference for a particular author, I'd rather use a term more neutral... and universal.
The bearish Gartley/Butterfly in the EUR/USD has been INVALIDATED.
Price went beyond the 100% retracement of the Gartley. Whatever happens from that point on, it won't be as a result of the Fib fractal.
Bullish butterfly in USD/CHF
A new Fibonacci fractal has completed forming in the USD/CHF 4h chart. It is a bullish butterfly. Its fibo ratios and symmetry are very good, so it may be the real deal. It took almost 3 weeks to complete so it's a fairly big sized pattern. The resulting move up should last at least a week.
TRADE INVALIDATION: If price goes below the June 02 low (1.0589)
Hi, if to follow the butterfly pattern, would you say that the butterflies (a big one plus a small one on the right) still hold on EURUSD daily chart? Point D (the top of right wing) has not exceeded the left wing top, and if take it as Gartley, it can exceed the left wing top but still be a bearish sign. Gartley and Butterfly chart patterns
Originally Posted by fxaprendiz
I am not sure how reliable these Gartley/Butterfly patterns are. Any thoughts?
I'm not good at explanations (English not first language) but maybe I can try by giving you chart examples from my archives. I apologize by giving only links to the charts instead of posting them directly here, but these are old charts and most of them were saved with the .bmp extension and take too much space, and changing their extension is not doing the trick (the last thing I want to do is to use up my 10MB allowance here). one of them is even over 1MB...
Originally Posted by Franosh
In example 1 you can see a butterfly that was successful in spite of price going first up to the next fibo level (176.4%).
For this and more experiences with butterflies is that I gave some breathing room to the Gartley/butterfly combo that was pronounced dead yesterday. The problem with the combination pattern is that price didn't go up to the next fibo level, but it went up and broke two of them, in addition to exceeding point X of the Gartley. In my experience, Gartleys aren't usually successful after their point X being taken.
What is expected of a Fibonacci fractal is the example 2 chart: price practically stalling and reversing after completion of the patterns. There are 7 fractals in this chart, and all of them save the first crab respected their expected reversal area.
I'm not saying price won't ever go beyond point D to make a pattern successful, but imho once price has broken 2 or more fibo levels, price is not obeying the fractals' attraction mechanism. If price finally goes your way, it probably will be because of another reason/cause.
Another thing to consider is that sometimes the cause of the pattern's failure is that it's undergoing a metamorphosis into a different fractal.
this is full out war! fxaprendiz for everybody
in the chart there, you can see a bullish bat to the right, which initially made a very promising looking reversal move, only for price to plunge later and make that bat a crab instead:
Truce now? fxaprendiz for everybody
As side note, notice the small bullish Gartley to the left in those charts: price briefly went lower than point D before going up, but it didn't touched point X level.
As to your last question, how reliable these patterns are, I still haven't draw enough of them (my goal is in the hundreds, not dozens, to start making statistics) to make a qualified statement, but I'd say in the 60% successful rate, which puts them at par with most trading strategies out there. What is needed is a second method of validation or trigger filter to make that success rate more like 70-80%, and that's why you see so many different indicators below my patterns charts in my blog. I'm still trying them all out, and also delving into EW, Ichimoku, candlesticks. Not all my work goes into the public blog, that's too much that people would like to see.
I hope all this made sense... hehe
As a final note, and maybe this is what you really were asking, if I think Euro will still go down, I'd say yes, I'm fairly confident it will go down this week; in fact, 1.4276 may be the top for this week and maybe even longer. But not because of the invalid patterns, but of other forces working (more Fibonacci relationships and ratios, candlesticks and Kumo cloud res/sup) and especially the bullish butterfly formed in USD/CHF that was just posted. While USD/CHF and EUR/USD are not perfect inverse pairs, that will do for me. Besides, I'm holding a long term position in the USD/CHF since June 2, so it better go up, lol.
P.S. the website you pointed out gives a good introduction to the fractals and I couldn't find fault with their statements.
Last edited by fxaprendiz; 07-21-2009 at 08:48 PM.
EUR/USD bear AB=CD
About 12 hours ago a bearish fractal completed forming in the 4H chart of the eurodollar. It is an AB=CD pattern, one of the simplest ones in Fibonacci geometry, and it's self-explanatory.
I recommend traders to be cautious, there are some risks here. If you wish more details, please visit my blogsite. I posted more charts there.
I once heard it in a video where the presenter said this USD/CHF pair "breathes 50 pips", so I guess if it eventually moves, you may expect wide swings.
Originally Posted by fxaprendiz
On the EUR/USD charts: If one looks at daily chart, it appears that a smaller butterfly is formed next to the right wing of the bigger butterfly. With today's close, it didn't move out of the range, so AB still=CD on the daily chart, where D should be around 1.4288/90 that was hit yesterday. Don't know how the stock market will play out next week. It appears that now the prime 'good' news part is over. If it comes down next week on weaker sentiments built on weaker earnings, then the bearish follow-up to the butterfly pattern might come true. If it's true for EURO, then your CHF pair scenario will also materialise.
A little irony
Originally Posted by Franosh
Now I know which butterfly you were referring to before, lol. Yeah, I actually have it in 2 versions in my blog. Just scroll down there to the post titled "some weird shapes". Once a pattern is located, I usually make the drawing in the next timeframe down since all the points and legs are clearer, so my chart for what you see in the daily is in the 4h timeframe.
I didn't post it in here because I had some reservations about it: the ratios on point B are off. I intend to publish here only the setups I consider more solid and geometrically harmonious.
Monday's new high at 1.4297 didn't really change anything. The AB=CD pattern is still in play.
The irony here is that while the AB=CD still hasn't been validated yet, the weird butterfly you're referring to has already have a move down to the 0.382 fib ret, which makes it already a valid fractal, if not pretty...
A word of caution
It seems like the bearish AB=CD and the bullish butterfly in EUR/USD and USD/CHF respectively are starting to get some traction.
However, for the swing traders it might be time to take profits: both pairs may have a correction in the next couple days.
Here are the charts. There's a bearish bat in the USD/CHF, while the eurodollar has a lot of Fibonacci support in the 1.4005-26 area.
Be careful everybody. Good luck.
Last edited by fxaprendiz; 07-29-2009 at 11:08 PM.
Hey nice thread and charts man, I've been meaning to post a chart in here for a while and here is one I drew earlier while looking for patterns
I'll post more refined charts whenever I can
Heres Cable 15min chart