Concept
Butterfly
Butterfly is a Elliott & Harmonics concept. The Library holds 1 implementation — a working definition you can pull into Quant.
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What is the Butterfly Pattern?
The Butterfly is an XABCD harmonic extension pattern associated with Bryce Gilmore and Larry Pesavento: unlike the Gartley or Bat, its D point completes beyond the X extreme. The common definition places B at a deep 0.786 retracement of XA, C at 0.382 to 0.886 of AB, and D at a 1.27 extension of XA, with 1.618 as the usual outer limit and an extended AB=CD often terminating in the same zone.
The lineage is unusually well documented. H. M. Gartley's Profits in the Stock Market (1935) supplied the retracement template that XABCD patterns descend from; Bryce Gilmore's ratio-based swing work and Larry Pesavento's Fibonacci Ratios with Pattern Recognition (1997) developed the Butterfly, a structure completing beyond the initiating extreme; and Scott Carney's Harmonic Trading books standardized the ratio grid most detection tools now implement, fixing the deep 0.786 B as its signature.
In practice the pattern builds a potential reversal zone in advance: the 1.27 XA projection, a BC extension commonly in the 1.618 to 2.24 band, and the completion of an extended AB=CD are stacked, and tighter overlap earns the zone more weight. All of the numbers come from the shared harmonic and Fibonacci ratio set; the Butterfly is simply the arrangement whose D leg extends beyond X instead of retracing within XA.
Because completion prints past the prior extreme, the Butterfly forms at fresh highs or lows: price runs the old extreme into the projected extension zone, and traders watch that area for reversal. The placement makes it a tool for fading terminal moves and an unforgiving one when the extension keeps extending, which is why most treatments require confirmation at D and abandon the pattern beyond the 1.618 XA level.
How to identify a Butterfly pattern on a chart
The pattern is measured, not eyeballed: identification is a sequence of ratio checks against the XA leg.
- 1Anchor X and A at a clear swing: XA is the baseline impulse every later ratio is measured against, so ambiguous pivots corrupt the whole grid.
- 2Check B: a retracement of about 0.786 of XA. A shallow B near 0.382 to 0.50 points to a Bat instead, and a B beyond X voids the structure.
- 3Check C: a retracement of AB inside the 0.382 to 0.886 band, holding short of A.
- 4Project D: the 1.27 extension of XA beyond the X extreme, cross-checked against the BC projection and an extended AB=CD finishing in the same area.
- 5Demand the new extreme: a valid Butterfly completes outside X; a turn before the prior extreme is taken out belongs to the retracement family instead.
- 6Wait for behavior in the zone: a rejection bar, a structure shift, or a failed push, rather than resting a blind limit order at 1.27.
How it's calculated
A five-point XABCD extension pattern that completes beyond X, at a 1.27 to 1.618 extension of the opening XA leg.
Introduced by Bryce Gilmore and Larry Pesavento and standardized by Scott Carney, whose ideal Butterfly completes at exactly 1.27 of XA with B fixed at 0.786.
Completions stretching toward 1.618 of XA are the extended variant, and Carney's ideal spec keeps the BC projection tame at 1.618 to 2.24; an AB = CD or extended AB = CD structure usually forms inside the pattern.
Automated detection typically allows a small tolerance around each ratio.
How traders use it
- To fade terminal extensions: traders project the 1.27 XA level in advance, wait for price to spike beyond the old extreme into the zone, and look for rejection before positioning, with early targets at retracements of the AD swing.
- To frame failed-breakout ideas: a completion just beyond X resembles a run of the prior extreme, so some traders pair Butterfly completions with failed-breakout or liquidity-sweep logic as confirmation.
- For invalidation discipline: the band between 1.27 and 1.618 of XA defines the tolerance; sustained trade beyond 1.618 voids the Butterfly, and the move is reassessed as a deeper extension structure or a plain continuation rather than a late completion.
- As one vote in a wider harmonic scan: detectors flag Butterflies alongside the rest of the harmonic patterns family, and many users act only when a completion lands on independent structure such as a higher-timeframe level.
- For exit planning rather than reversal trading: a Butterfly completing against an open trend position marks a location to tighten stops or scale out without taking a countertrend entry.
Butterfly vs neighboring harmonic patterns
Crab: Both complete beyond X, but the Crab stretches to a 1.618 XA extension with a shallower B (0.382 to 0.618), while the Butterfly completes at 1.27 with a deep 0.786 B.
Gartley: The Gartley completes inside the XA leg at a 0.786 retracement; the Butterfly uses 0.786 at the B point instead and completes outside XA at an extension.
Three Drives: Three Drives reaches its terminal zone through three symmetric pushes with corrective pauses rather than one XABCD structure. Both are extension-completion templates in the Pesavento lineage, and both demand a reaction before entry.
Concept family
Elliott & Harmonics
33 concepts mapped · 33 in the Library
Butterfly FAQ
What is the difference between a Butterfly and a Gartley pattern?
Where D completes. The Gartley is a retracement pattern that finishes inside XA at the 0.786 level; the Butterfly is an extension pattern that finishes beyond X, typically at 1.27 of XA. A useful mnemonic: the Butterfly moves the 0.786 ratio up to the B point, and its completion prints a new extreme rather than a pullback.
Is the Butterfly pattern bullish or bearish?
Either, depending on orientation. A bullish Butterfly completes below the X low and is watched for a move up; a bearish one completes above the X high and is watched for a move down. The pattern only supplies a location and its invalidation. Direction comes from which side it completes on, and confirmation is still required because extensions can keep running.
What are the Fibonacci ratios for the Butterfly pattern?
The common grid: B at 0.786 of XA, C between 0.382 and 0.886 of AB, and D at a 1.27 extension of XA with 1.618 as the outer limit, often overlapping a BC projection and an extended AB=CD. Detectors apply tolerance bands around these numbers, and tolerances differ, so two tools can disagree on the same chart.
What invalidates a Butterfly pattern?
During formation, B or C exceeding the swing it retraces (B beyond X, C beyond A). At completion, sustained trade beyond the 1.618 XA extension, the usual hard limit. Many traders also drop the idea if the zone produces no reaction and price accepts beyond it.
Is the Butterfly pattern reliable?
No robust public statistics settle it. Results depend on how strictly the ratios are enforced, what counts as confirmation, and the market and timeframe, so any quoted success rate reflects one tester's rules. The pattern supplies a pre-defined location and invalidation, and the edge, if any, comes from what the trader does there.
Where do stops and targets go on a Butterfly trade?
A common structure places the stop beyond the 1.618 XA extension, or beyond the reaction extreme at D, with initial targets at retracements of the AD swing, commonly 0.382 and 0.618. The achievable reward-to-risk depends on how far beyond 1.27 the entry actually fills.
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