Product Review: Barrie Hetirachi's Five Point Pattern by Dennis D. Peterson
The Five Point Pattern is part of the Wave59 drawing tools. This drawing tool was developed under the guidance of Barrie Hetirachi, who has 20-some years of experience with the markets, and worked with Earik Beann, the Wave59 designer/creator/developer, to create something that likely will expand your trading horizons. This particular drawing tool set, which used to be part of the Wave59 price/time tool set, is one you might pass over if it weren’t for Hetirachi’s comprehensive explanation of the use of the tool, and once you hear it, you can’t help but be impressed.
The name “Five Point Pattern” comes from an adaptation of a technique first published in H.M. Gartley’s 1935 book Profits In the Stock Market. A bullish or bearish Gartley pattern is sometimes referred to as the “222” pattern.
You can find a number of explanations of the Gartley pattern on the Internet (as well as software that incorporates some aspects of or specializes in Gartley’s work). Larry Pesavento was the first trader to popularize the pattern, and he has written numerous books on the subject.
The patterns are typically annotated with dashed lines depicting the relationship between the swings. I decided to draw the bullish Gartley pattern on my own (Figure 1), and here are the criteria you need to keep in mind when doing so. The first wave is the largest and I drew it at about 45 degrees, although that is not required. Just avoid price changes that are exhaustion or sideways movements.
This is the wave from X to A. The wave from A to B is an impulse wave that is the beginning of a retracement. If you remember from Advanced GET or the point system in the Pristine trading method, if the retracement is too large, it is likely that the impulse wave is not strong enough. You’ll see annotations on the web showing a 0.618 retracement.
The use of Fibonacci ratios as criteria for price change is the other part of the Gartley pattern. I made my A to B retracement around 38.2%. Thus, the price change of A to B should be something in the range of 38.2% to 61.8% of the price change from X to A, and some would argue that it shouldn’t be more than 50%.