Butterfly pattern can be found near key market reversal points, usually at intermediate highs and lows. BC can retrace between.2.6. BC retraced close.9 of the AB leg. CD can be an extension.618.618.
While the above bearish butterfly might not have met all the requirements as outlined, it does demonstrate that traders have to be a bit flexible when applying the ratios. Once the swing/pivot point at D is formed, price starts to break down and promptly reaches the target.8 and.272 of the CD leg.
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The Harmonic Pattern Butterfly is closely related to the, gartley 222 pattern with the btc usd trading strategy main difference being that the Butterfly patterns CD extends beyond the XA leg. Here again we can see how the bullish butterfly pattern, did not meet all the rules specified in the trade rules but managed to rally and meet the price objectives. The point D is known as the PRZ. BC retraces close.6 of the AB leg. The following chart illustrates a bearish butterfly example: AB leg retraced.9 of the XA leg.
This would have made this Butterfly pattern a bit weaker but it is a butterfly pattern nonetheless. AB can retrace up.6 of the XA leg.