The Butterfly Pattern - Rules of Engagement

FX:AUDNZD   Australian Dollar / New Zealand Dollar
The Butterfly Pattern

Created by Bryce Gilmore, the perfect Butterfly pattern - here are the rules of engagement for this pattern:

Rule 1:
The Butterfly Pattern begins with a market move/impulse leg that establishes our X and A points.
Once X and A points have been identified, we then look at rule 2...

Rule 2:
The Market forms B completion point by fulfilling at Least 78.6% retracement of the XA leg.
AB move remains valid as long there is at least a 78.6% retracement of XA and does NOT close above the 88.6%

Rule 3:
If rule 1 and 2 has been met, then the market forms the C completion point by fulfilling at least a 38.2% retracement of the AB leg.
Point C remains valid as long as there is at least a 38.2% retracement of AB and there is not a candle close at or beyond the 88.6% retracement of AB.

Rule 4:
If rule 1,2 and 3 have been met, then the market forms the D completion (this will be the entry point) by fulfilling a 127.2% extension of XA.
In a valid CD move, the 127% retracement of XA shows ratio confluence with the 161.8% of AB.
The D completion point must extend past X

Trade Rules/Trade Management:
Entry at D, stop loss 141.3% extension of XA and target 61.8% retracement of AD


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