"The bullish butterfly, which indicates when traders should buy, and the bearish butterfly, indicating when traders ought to sell.
Butterfly patterns help traders in spotting the end of the current move so that they can take the trade.
The bullish and bearish butterfly patterns have the following characteristics that can be used to identify them.
AB can retrace up to 78.6% of the XA leg
BC can retrace between 38.2% – 88.6% of AB
CD can be an extension of 1.618% – 2.618% of AB
CD can also be an extension of up to 1.272% – 1.618% of XA leg
The point D is known as the Potential Reversal Zone (PRZ)
From Point D, you can enter a trade with stops at or above (below) the price point at D."
Taken from warriortrading.com
Butterfly patterns help traders in spotting the end of the current move so that they can take the trade.
The bullish and bearish butterfly patterns have the following characteristics that can be used to identify them.
AB can retrace up to 78.6% of the XA leg
BC can retrace between 38.2% – 88.6% of AB
CD can be an extension of 1.618% – 2.618% of AB
CD can also be an extension of up to 1.272% – 1.618% of XA leg
The point D is known as the Potential Reversal Zone (PRZ)
From Point D, you can enter a trade with stops at or above (below) the price point at D."
Taken from warriortrading.com
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