Forex Focus  |  NOV 2006

Forex Focus: Profiting From The Gartley by Todd Gordon

Stocks & Commodities V. 24:11 (14-18): Forex Focus: Profiting From The Gartley by Todd Gordon Access to foreign exchange trading has opened up exciting trading options for the retail trader. You can now trade alongside corporations and institutions in a highly liquid market that is global, traded around the clock, and highly leveraged. Before jumping into this market, however, we must understand the factors that affect the forex market. With that in mind, STOCKS & COMMODITIES has introduced Forex Focus to better prepare the retail trader to participate in the currency market. By identifying advanced patterns in markets about to reverse, you can get a better idea when and where the next five-wave trend could emerge. A distinctive and recognizable pattern occurs in the early stages of an emerg-ing trend. Being aware of such a pat-tern can help you position yourself for the pending move. This article will detail the characteristics of that pattern, the symmetrical price legs contained within it, what the price implications may be, and how a trader can iden-tify and profit from this powerful pattern, re-ferred to as the Gartley pattern. We will also delve into Elliott wave theory to further substan-tiate the symmetrical price swings that accom-pany Gartley patterns and their relative location to the market trend. THE GARTLEY PATTERN H.M. Gartley first introduced the pattern in 1937, but it wasn’t until the late 1980s, when trader Larry Pesavento assigned expected ratios to the four legs of the pattern, that its use became more widespread. Essentially, the Gartley pattern uncovers the market’s tendencies to take advantage of the trend-following crowd. Unknown to the trend-followers, Gartleys frequently appear at critical reversal levels. They begin to take shape in the consolidation zones following an extended trend and will often bait latecoming trend-followers into the market, to their dismay.

by Todd Gordon, CMT