The Butterfly pattern In this pattern, the Fibonacci ratios that give reliable reversals are – a.) The B point is at the 0.786 retracement of XA. b.) The D point forms at the 127 (minimum) or the 161 projection of XA.
Harmonic patterns apply specific Fibonacci retracements and extensions to a price structure. These patterns can be quite powerful and often give you straightforward entry and exit points. The main advantage of these patterns is that they leave little to guesswork and rely on specific Fibonacci numbers.