The butterfly pattern is made up of four legs marked X-A, A-B, B-C, and C-D. It helps traders determine when a current price move is probably getting to its end. This means traders can enter the market as the price changes direction. How to identify the Butterfly pattern?
What is a butterfly market strategy?
The butterfly market strategy is part of the Harmonic trading patterns. Our team at Trading Strategy Guides has developed the most comprehensive step-by-step guide into Harmonic trading. We highly advise you to first start reading the introduction into the harmonic patterns here: Harmonic Pattern Trading Strategy- Easy Step By Step Guide.
How to set a butterfly profit target?
There are many ways to manage your trade and set the butterfly profit target. But, the ideal target for the Butterfly harmonic is to implement a multiple take profit strategy. For both the bearish butterfly pattern and bullish butterfly pattern, we’re going to take the first partial profit once we hit starting point A.
What is a butterfly pattern reversal chart?
The butterfly pattern is a type of reversal chart pattern related to the harmonic pattern classification. It indicates price consolidation and is particularly noticeable after a prolonged price move. Traders can use the butterfly pattern to predict when a trending advance will stop and when a corrective or new trend phase will begin.
