Saturday, 17 October 2009

Butterfly Effect

When traders hear about the Elliott Wave, they are usually at the same time hear about Fibonacci relationships. Just the reverse is also true. When discussing the Fibonacci ratio, it is almost always in the context of Elliott waves, or measurement of some recovery. However, I would like to propose the use of Fibonacci ratios to any graphical model. In this article, will be presented a graphical model, which is seldom discussed among traders - Butterfly Gartli.

JM Gartli published the book "The profit on the stock exchange in 1935. In this book, he refers to the graphical model, which can be confused with the well-known Elliott Wave. There are similarities, but it is - not the same model. Where in the Elliott Wave uses the numerical designation for the pulse waves and letters to the rehabilitative model Gartli only uses the letter to the central or turning points in the model. This is just one of the differences that can be seen immediately, but there are many others. Therefore, traders who use Elliott waves, may be somewhat confused model Butterflies Gartli. Therefore, it may be useful to take the material presented here, such as it is, rather than to compare two models with each other. There are several varieties of butterflies models, but this article will discuss only one variety.

In the above diagram, we see a common model of butterflies Gartli. At first glance it may look very strange. However, to begin I will explain the model and then show a graphic example. Black lines in the model of butterflies represent the price movement of market instruments. Thus, in Figure 1, we can see that the price movement occurs from point X to point A. Then, we have a downward fluctuation to a point B, which is not beyond the point X. This is accompanied by a movement to point C, which does not exceed the point A. Finally, the butterfly ends of oscillation in descending point C to point D. For purposes of discussion, this type of butterflies Gartli, consistent price fluctuations from point A to point D is within the price range determined by the points X and A.

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