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Mikula Forecasting
Company: Strategy #14:
Butterfly Patterns
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Written by: Patrick Mikula CTA
Copyright (c)2003-06 by Patrick Mikula All Rights Reserved.
(Please to not copy or foreword this article).
Mikula Forecasting Company
P.O. Box 152672
Austin, TX 78715-2672
USA
www.MikulaForecasting.com
support@MikulaForecasting.com
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This strategy will discuss making pivot forecasts using the
Bullish Butterfly and Bearish Butterfly. The Butterfly
pattern is similar to the traditional Gartley pattern but
the forecast swing which is CD extends past pivot X. To read
a description and requirements for the Gartley pattern
please read the previous Strategy 13. The Butterfly pattern
has two variations, the Bullish Butterfly and the Bearish
Butterfly. Below are some recent examples of these patterns.
The first chart below shows the stock for Alcoa symbol AA.
On this chart the forecast for the swing CD was made well
before the completion of swing CD giving a trader ample time
to watch the market move toward the forecast point. This
market moved down to the forecast point D and then a little
past the forecast point D before making a reversal.
The next chart shows a Bullish Butterfly pattern for Boing
symbol BA. The forecast swing CD was again made well before
the forecast point D. The lines that connect the pivots on
the chart below show the closest Fibonacci retracement
level. The forecast point D is near Fibonacci price
extension levels, 1.618 and 2.618 over the previous swings.
When Boing moved up to the forecast, the market made a top
just past the exact price and time but then turned down.
The chart below shows a small Bullish Butterfly on the stock
for the Chubb Group symbol CB. After the forecast for the
swing CD was made the stock fell into the bottom forecast at
D. The stock made a spike bottom just before point D and
then started a slow upswing from the forecast bottom at
D.
MORE:
To see more examples of this strategy read the
version of this article on the MarketWarrior
owners page.
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Mikula Forecasting Company