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Butterfly Pattern

AnalyticsTrade Team
AnalyticsTrade Team Last updated on 30 Apr 2023
Category: Harmonic Patterns
BUTTERFLY Harmonic Patterns Trade

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Transform Your Forex Trading with the Butterfly Pattern: A Harmonic Marvel

Hello, fellow traders! Today, we’ll explore one of the most visually stunning and effective trading strategies in the world of forex: the Butterfly Pattern. This mesmerizing harmonic pattern can help you identify high-probability reversal zones, giving you a competitive edge in the market. So, let’s spread our wings and dive into the captivating realm of Butterfly Pattern trading!

What is the Butterfly Pattern?

The Butterfly Pattern is a type of Harmonic Pattern that leverages the power of Fibonacci ratios and market geometry to predict potential reversals. This pattern consists of five points (X, A, B, C, and D) and is used to identify high-probability trade setups in the forex market. Traders enter long or short positions at point D, depending on the reversal direction.

How to measure the Butterfly harmonic pattern?

Stage 1: Formation of B retracement leg – This leg must form and touch 0.786 retracement only from point X to point A impulsive leg, hitting the next level 0.886 would invalidate the pattern.

Stage 2: Formation of C Impulse leg – Once stage 1 is met, point C would be the next one to form and must be within 0.382 to 0.886 levels of point A to B retracement leg.

Stage 3: Formation of D retracement leg – Butterfly pattern must form point D at 1.272 point X to point A retracement. This is where the pattern is considered complete and the levels to execute a trade. Stop losses placed just below 1.414 levels and targets at 0.382 and 0.618 measuring point C to point D.

XA Any impulse leg
B 0.786 XA
C 0.382 – 0.886 AB
D 1.272 XA
Stop loss Few pips from 1.414 XA
Take profit 0.382; 0.618 CD


Long Trade example

Butterfly Pattern (Long Trade) Butterfly Pattern (Long Trade)


Short Trade example

Butterfly Pattern (Short Trade) 2


Butterfly Pattern (Short Trade) 2

Why Choose the Butterfly Pattern Trading Strategy?

Here are some compelling reasons to consider incorporating the Butterfly Pattern into your trading toolkit:

  • It offers a high probability of success due to its accuracy in pinpointing reversal points.
  • It’s based on Fibonacci ratios, which are revered and widely used by traders globally.
  • It’s a versatile strategy that performs well in various market conditions.

Butterfly Pattern vs. Other Harmonic Patterns

Let’s see how the Butterfly Pattern compares to other popular Harmonic Patterns:

Butterfly Pattern Other Harmonic Patterns
Features a 1.27 or 1.618 extension of the XA leg at point D. Other patterns have different extension levels at point D.
Has a distinct “wing” shape, resembling a butterfly. Other patterns have different shapes, such as bats, crabs, or sharks.
Works well in both ranging and trending markets. Some patterns may perform better in specific market conditions.

Top 10 Currency Pairs for Butterfly Pattern Trading

  1. EUR/USD
  2. USD/JPY
  3. GBP/USD
  4. AUD/USD
  5. USD/CAD
  6. USD/CHF
  7. EUR/JPY
  8. EUR/GBP
  9. NZD/USD
  10. GBP/JPY

Interesting Q&A on Butterfly Pattern Trading

Q: How do I correctly draw the Butterfly Pattern on my chart?
A: To draw the Butterfly Pattern, start by identifying the XA leg. Then, use Fibonacci retracements and extensions to find points B, C and D. Remember that point B should be a 0.786 retracement of the XA leg, point C should be a 0.382-0.886 retracement of the AB leg, and point D should be a 1.27 or 1.618 extension of the XA leg and a 2.0 extension of the BC leg.
Q: Can I use the Butterfly Pattern on different timeframes?
A: Yes, the Butterfly Pattern can be applied to various timeframes. However, keep in mind that higher timeframes like the 4-hour or daily charts often provide more reliable signals.
Q: How do I manage risk when trading the Butterfly Pattern?
A: Proper risk management is crucial when trading the Butterfly Pattern. Always use stop-loss orders, typically placed just beyond point X for long positions and below point X for short positions. Additionally, consider using a risk-reward ratio of at least 1:2 or 1:3 to maximize your profits while minimizing risk.

My Personal Experience with Butterfly Pattern Trading

When I first encountered the Butterfly Pattern, I was instantly captivated by its elegant design and the precision with which it identified market reversals. At first, I was skeptical, but after incorporating the Butterfly Pattern into my trading routine, I quickly realized its potential to transform my trading results.

One of the things I love most about Butterfly Pattern trading is its versatility. It’s proven to be a valuable tool in both trending and ranging markets, providing me with ample opportunities to capitalize on market reversals. The Butterfly Pattern has become an indispensable part of my trading toolkit, and I’m confident it can do the same for you!


The Butterfly Pattern is a powerful and enchanting trading strategy that can help you identify high-probability reversal points in the forex market. By mastering this harmonic pattern and incorporating it into your trading repertoire, you’ll be well on your way to elevating your forex trading journey. So, spread your wings and give the Butterfly Pattern a try – you won’t be disappointed!


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