V. 19:1 (40-47): The Gartley Setup by Rudy Teseo

If identifying head-and-shoulders or cup-with-handle patterns has left you frustrated, don’t despair! This classic system might be for you.

Price patterns by themselves (without moving averages and indicators) are all that is necessary to chart a stock and understand what’s happening. We might say that pattern recognition is the heart of technical analysis. If that’s true, why are technical indicators the backbone of 99% of our systems? Is it because we have trouble identifying those head and shoulders, cups with handles, and ascending triangles? Here’s a technique that uses price charts only, is fairly easy to master, and has a track record of 70% wins.

I use Fibonacci ratios to measure the retracements of a stock’s up and down movement, with the objective of developing a geometric pattern that, when completed, gives a buy or a sell signal.