Bearish Butterfly Chart Pattern — How to Spot and Trade It

D completes ABOVE X at ~127-161.8% of XA — a stop-run above the old high, then reversal.

In plain words

A pole-vaulter clearing the bar — and landing on the other side.

What the classic books say

The Bearish Butterfly is a reversal pattern with reference reliability Medium and illustrative behaviour of ~60-65% at valid PRZs (the kind of statistics catalogued in Bulkowski's encyclopedic pattern studies and Murphy's technical-analysis classic). Mirror of the bullish butterfly.

Level by level

Beginner

Price pokes above the old high to trap breakout buyers — then rolls over.

Intermediate

The extension beyond X sweeps liquidity before the sell-off.

Advanced

Divergence + engulfing at D is the classic trigger.

Trade plan (educational template)

• Entry: At the 127-161.8% extension with bearish confirmation.
• Stop-loss: Beyond the 161.8% extension.
• Target: B first, then A.
• Check the numbers with the Risk-Reward calculator before any entry.

Common beginner mistakes

• Confusing it with a simple breakout

Practise it now

• ▶ Draw the Bearish Butterfly with live trendlines and a ghost forecast
• 📖 Full lesson in the Learning Hub

_Educational content only — not financial advice. Historical behaviour never guarantees future results._