Been trying to catch the D point on the Daily chart above. The first two, D1 and D2, failed but D3 led to price action breaking through the 8ema and closing below it with confirmation, which gives confidence this is the one. Its looking so weak, I decided to get in short, even though we're pretty far from the 1415 D3 point already. Even down this far, we still have a good Risk/Reward. More on the R:R later.
The proper Stop for a Gartley pattern (aka XABCD) is just above the X point, but that represents too much potential loss (Risk) if we hit it. So, we're using the recent swing high (D3) instead of the X point.
The Target is the usual .618AD, which is the 61.8% Fibonacci retracement of the A point to D point range. You can find all the Targets to consider in the box on the chart.
So, right at the Close today, I shorted a YK mini-contract at 1361 1/4.
Summary:
Entry: 1361 1/4
Stop: 1416
Target 1279 (shaded a little from D3 point to allow for slippage and the Bid/Ask spread)
Risk: 1416 - 1361.25 = 54.75 points * $10/pt = $547.50
Reward: 1361.25 - 1279 = 82.25 points * $10/pt = $822.50
R:R = 822.5/547.5 = 1.5:1 which is actually quite good if you consider the Gartley pattern has a 75% success rate at the .618AD Target.
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