The pattern is composed of four price swings (legs) and five pivot points labeled X, A, B, C, and D. It can appear in two forms: Bullish (looks like an "M") and Bearish (looks like a "W"). XA Leg: The initial impulse move that sets the range. AB Leg: A sharp retracement of the XA leg. Crucial Rule: Point B must be exactly at the 78.6% retracement of XA. BC Leg: A move in the same direction as the original trend. It should retrace between 38.2% and 88.6% of AB. CD Leg: The final move and the "secret sauce" of the Butterfly. Unlike other patterns, the CD leg must exceed Point X, typically reaching 127.2% to 161.8% ... (full story)