The Fibonacci Butterfly pattern is one of the Fibonacci patterns with a basic 4-foot pattern (XABCD) such as the Fibonacci Gartley and Bat patterns with important differences, namely the longest leg on the last leg. In other words, the last leg (CD) is the Fibonacci extension of the initial leg.
Fibonacci Butterfly pattern formation provides trading opportunities with signals at extreme high or low price levels because of the longest last leg.
That way, traders can immediately open positions to anticipate reversals once their longest legs have formed a Fibonacci Butterfly pattern completely.
Like most Fibonacci patterns, the Fibonacci Butterfly pattern has a bullish and bearish version. Here is an example:
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