Gartley, Bearish

Core idea

The bearish Gartley is a five-turn harmonic pattern (X-A-B-C-D) named after H. M. Gartley, who introduced it in the 1930s. The pattern looks like a big W with unequal bottoms — an "ugly double bottom" where each turn is qualified by a Fibonacci ratio of the prior leg. The defining final filter: DA/XA ≈ 0.786 (within 3%). Unlike the bearish crab, where point D extends above X, the Gartley's point D sits below the X high — a less extreme target that produces a more modest reversal.

Among the five bearish Fibonacci-based patterns Bulkowski studies, the Gartley is the best performer in bear markets by post-D drop. The reversal rate at D is 87-89% — high enough to depend on. The bull-market failure rate is roughly three times the bear-market rate, because a downward turn against a rising market faces a headwind.

A common quirk

About 27% of bearish Gartleys dip briefly after D, climb to a slightly higher high (point G), then drop. This makes tight stops just above D vulnerable to fakeouts. A wider stop or a confirmation-based entry handles this better than a pure mechanical short at D.

Why it matters

The Gartley illustrates the market-regime sensitivity that affects every short-side pattern. Bear-market Gartleys have low failure rates and good drops because the broad tide is going their way. Bull-market Gartleys face the opposite: a strong general rally lifts most stocks, and the bearish reversal at D often busts upward instead. The takeaway is broader than the Gartley: before trading any bearish pattern, check the broad-market trend and the sector trend. Shorting in a strong bull market is like sailing into the wind — possible but expensive.

The topic also shows the diminishing-returns drop pattern of harmonics. Price reaches point B (closest below D) reliably; reaches A (the bottom of the pattern) only ~34% of the time in bull markets. Setting a target at A is wishful; setting it at B captures most of the reliably-reachable move.

Key takeaways

Mental model

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Practical application

Identification

Trading the reversal

Example

A consumer-discretionary stock prints these turns over four months: X at $84 (April high), A at $66 (May low), B at $77 (June high — BA/XA = ($77-$66)/($84-$66) = 0.61, close to 0.618 ✓), C at $69.50 (July low — BC/BA = ($77-$69.50)/($77-$66) = 0.68, within Fib range ✓), D at $80 (September high — DC/BC = ($80-$69.50)/($77-$69.50) = 1.40, within 1.272-1.618 ✓; DA/XA = ($80-$66)/($84-$66) = 0.78, within 3% of 0.786 ✓).

Valid bearish Gartley. The general market is in a corrective phase — slight tailwind for the short side.

Day 1 after D: price closes at $79.20. Day 2: price closes at $77.80 — confirmed turn.

You short 100 shares at $77.50 the next morning, stop at $82 (~3% above D for the quirk-buffer).

First target: B at $77 — already nearly there. You hold (the entry was inside the first target).

Stretch target: A at $66.

Three weeks later, price hits $65.50. You cover at $66 for an $11.50/share profit ($1150). The pattern worked cleanly because:

• Market regime was supportive (corrective, not vertical bull).
• The post-D confirmation pattern was clean (no dip-and-rise quirk).
• The target sequence was respected: take partial at B, push to A only when the regime supports it.

Bad-case scenario: same pattern in a strong bull tape. Price reaches D, turns down to $75 — and then reverses upward, breaking above $84 in two weeks. You'd be stopped out at $82 for a small loss (~$450 on 100 shares). The pattern's structure was valid; the market regime killed the trade.

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