Gartley Pattern
The Gartley pattern is the most common harmonic chart pattern. Harmonic patterns operate on the premise that Fibonacci sequences can be used to build geometric structures, such as breakouts and retracements, in prices.
Oftentimes, point 0 is used as a stop loss level for the overall trade. These Fibonacci levels do not need to be exact, but the closer they are, the more reliable the pattern.
What Is a Wolfe Wave
A Wolfe Wave is a chart pattern composed of five wave patterns in price that imply an underlying equilibrium price.
- The waves must cycle at a consistent time interval.
- The third and fourth waves must stay within the channel created by the first and second waves.
- The third and fourth waves must show symmetry with the first and second waves.
In a Wolfe Wave pattern, the fifth wave breaks out of the channel. According to the theory behind the pattern, a line drawn from the point at the beginning of the first wave and passing through the beginning of the fourth wave predicts a target price for the end of the fifth wave.
If a trader properly identifies a Wolfe Wave as it forms, the beginning of the fifth wave represents an opportunity to take a long or short position. The target price predicts the end of the wave, and therefore the point at which the trader aims to profit off the position.