Butterfly

The Pattern

The Butterfly, credited to Bryce Gilmore and Larry Pesavento, is an extension pattern. Unlike the Gartley and Bat, which complete short of the origin, the Butterfly completes beyond it: D lands at a 1.272 to 1.618 extension of the X-to-A leg. The B point is a 0.786 retracement of XA, and the C-to-D leg projects 1.618 to 2.24 of BC.

Because D extends past X, the Butterfly marks a new high or low rather than a pullback inside a range.

The Idea Behind It

The Butterfly is a bet on exhaustion at a fresh extreme. Price stretches past the prior origin into a measured extension, where the move is expected to run out of buyers or sellers and snap back. It is a counter-trend structure: you are fading the new extreme, not joining it.

When It Tends To Work

It works on a final thrust that overshoots into the 1.272 to 1.618 zone and stalls, especially when that zone lines up with a longer-term level. Clean turns from a Butterfly can be sharp because the whole market was leaning the other way.

When It Tends To Fail

Fading a new extreme is dangerous when the extreme is the start of a breakout. A Butterfly that keeps extending turns into a trend you are now positioned against. The counter-trend nature makes discipline on the stop essential.

How This Strategy Trades It

On a completed Butterfly, the strategy enters at the close of the confirming bar against the thrust, targets a 0.618 retracement of the structure, and stops just beyond D. See the Harmonic Patterns family page for the shared mechanics.

What The Backtest Says

The Butterfly is one of the more active patterns in the family and its results lean positive on the equity-index samples at 15 minutes, with gold more mixed. The samples below show a structure that turns often enough to be worth studying, though far from a sure thing.