FOREX THEORY
The Butterfly
Then, there is the Butterfly pattern. Like Muhammad Ali, if
you spot this setup, you’ll surely be swinging for some knockout-sized pips!
Created by Bryce Gilmore, the perfect Butterfly pattern is
defined by the .786 retracement of move AB with respect to move XA. The
Butterfly contains these specific characteristics:
-Move AB should be the .786 retracement of move XA.
-Move BC can be either .382 or .886 retracement of move AB.
-If the retracement of move BC is .382 of move AB, then CD
should be 1.618 extension of move BC. Consquently, if move BC is .886 of move
AB, then CD should extend 2.618 of move BC.
-CD should be 1.27 or 1.618 extension of move XA.
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