Butterfly pattern: a reversal harmonic where D extends beyond X at 1.272-1.618 of XA. Catches exhaustion points at the end of strong moves. Price overshoots the original swing and exhausts, reversing sharply.
Indicators Used
Harmonic ButterflyFibonacci Retracement
Rules
📈 Bullish Butterfly Long
- XABCD structure with D EXTENDING beyond X
- B retraces to 0.786 of XA (key Butterfly ratio)
- C retraces to 0.382-0.886 of AB
- D extends to 1.272-1.618 of XA
- CD leg extends to 1.618-2.618 of BC
- Enter long at D with reversal candle confirmation
- Stop: below 1.618 extension of XA (tight stop beyond D)
- Target: 0.618 retrace of AD
0.786
B-point XA
1.272+
D beyond X
💡 Pro Tip
Butterflies catch exhaustion moves. They work best after a fast, extended directional move. The D-point being beyond X means you're catching the absolute turn, which is both high-reward and higher-risk than deeper patterns like Bat or Gartley.