What is the Cypher pattern? Origin and rules

Unlike the Gartley, Bat, Butterfly and Crab, the Cypher does not come from Scott Carney’s books. It is credited to Darren Oglesbee and spread through online harmonic-trading communities, so there is no single official rulebook: scanners, indicators and drawing tools use slightly different tolerances. The rules below are the most common version.

Each point is a completed swing. In a bullish Cypher, X is a low, A a high, B a higher low, C a new high above A, and D the pullback where buyers are expected. A bearish Cypher is the mirror image.

  • XA: the first swing.
  • B: a 0.382–0.618 retracement of XA. A deeper B disqualifies the pattern in most rule sets.
  • C: beyond A, at 1.272–1.414 of XA, meaning the distance from X to C is 1.272–1.414 times XA. TradingView’s Cypher tool widens the band to 1.13–1.414 and calls its levels a recommendation.
  • D: a 0.786 retracement of XC, the whole swing from X to C. D stays above X in a bullish Cypher.
  • Optional check: some rule sets add that CD measures about 1.272–2.0 times BC, which helps confirm the zone.
XC leg
The whole swing from X to C. In a Cypher it is longer than XA, and D is measured as a fraction of it.
0.786 XC retracement
The level 78.6% of the way back from C toward X. With X at $50.00 and C at $63.20, it sits at $52.82.
Extension of XA (for C)
A level beyond A measured from X. At 1.272, C sits 27.2% of XA above A in a bullish pattern.

How the Cypher differs from classic XABCD patterns

In the classic family, C is a retracement of AB (0.382–0.886), so C stays below A in a bullish pattern, and D is measured against XA: 0.786 for the Gartley, 0.886 for the Bat, 1.27 or 1.618 for the extension patterns. In the Cypher, C breaks above A, so the move from B to C looks like a breakout to a new high, and D is then measured against XC. The drawing below shows the two side by side.

That has two practical effects. First, D lands well inside the pattern: 0.786 of XC from C leaves D at 0.214 of XC above X, or roughly 0.27–0.30 of XA. X is still intact, so it remains the structural stop, as in a Gartley. Second, the Cypher often appears where traders who bought the breakout above A get shaken out: price pulls back hard after a new high, and the pattern looks for that pullback to end.

Because the measurement changes, the same five points can give very different answers. If you measure the Cypher’s D against XA by mistake, you put it at the wrong price; the example below shows by how much.

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Two panels: on the left, a classic XABCD (Gartley) whose C stays below the dashed A line, with a bracket measuring XA, the note C stays below A and the rule D = 0.786 XA; on the right, a Cypher whose C rises above the dashed A line, with a longer bracket measuring XC, the note C breaks above A and the rule D = 0.786 XC.

The Shark pattern: Carney’s 0.886–1.13 cousin

Scott Carney introduced the Shark in 2011, in his Patterns into Profits course. It is also a five-point pattern, but he labels the points 0, X, A, B and C because it completes at C. Like the Cypher, it contains a leg that breaks beyond the previous extreme; unlike the Cypher, it completes much deeper, around the pattern’s origin.

Carney describes the Shark as the structure that often comes before his 5-0 pattern: after a Shark completes, the next leg frequently retraces about 50% of BC, which is where a 5-0 completes. The drawing below shows a hypothetical bullish Shark with that follow-up leg.

  • Points: 0, X, A, B, C. In a bullish Shark, 0 is a low, X a high, A a higher low, B a new high above X, and C the completion.
  • B: a 1.13–1.618 extension of XA, beyond X.
  • C: completes between the 0.886 retracement and the 1.13 extension of the 0X leg, often alongside a 1.618–2.24 extension of AB.
  • Stop and management: beyond the 1.13 level, since C may already sit past 0. The Shark is usually traded as a quick reaction, with profit often taken around the 50% retracement of BC, where a 5-0 would complete.
  • Cypher vs Shark in one line: the Cypher completes at 0.786 of XC, above X; the Shark completes at 0.886–1.13 of its first leg, around or slightly beyond its origin.

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A bullish Shark with the points 0, X, A, B and C: B rises above X (B = 1.13–1.618 XA), C falls into a yellow band around the dashed 0 level labeled 0.886 0X and 1.13 0X (BC = 1.618–2.24 AB), and a green dotted leg rises from C, noted 5-0: next leg ≈ 50% of BC.

Cypher pattern example: measuring a bullish Cypher

A hypothetical 1-hour chart of a stock, shaped like the drawing at the top of the page. X is a swing low at $50.00 and A a swing high at $60.00:

  • XA = $60.00 − $50.00 = $10.00.
  • B = $55.00: AB = $5.00, a 0.50 retracement of XA, inside 0.382–0.618.
  • C = $63.20, above A: XC = $13.20, and $13.20 ÷ $10.00 = 1.32, inside 1.272–1.414 (C between $62.72 and $64.14).
  • D = $63.20 − 0.786 × $13.20 = $63.20 − $10.38 = $52.82.
  • Second measurement: BC = $8.20, and 1.272 × $8.20 = $10.43 puts D at $52.77, almost on top of the 0.786 level.
  • Zone: $52.77–$52.82, with the 0.886 XC level ($51.50) as the deep edge and X ($50.00) as the line that must hold.
  • The common error: 0.786 of XA would put D at $52.14, $0.68 lower, a level with no meaning for this pattern.

Entries, stops and targets for the Cypher

Entry: some traders rest a limit order at the 0.786 level; the approach used on this site is to wait for a candle to close back up out of the zone. In the example, price trades down to $52.70 and a 1-hour candle closes at $53.40 with a long lower wick. You buy at $53.40.

Stop: two common choices, shown in the drawing below. The structural stop goes just below X, at $49.80, because a Cypher that trades through X no longer exists: $3.60 of risk. The tight stop goes just below the 0.886 XC level, at $51.30: $2.10 of risk, but hit more often.

Targets: the usual convention is the 0.382 and 0.618 retracements of the CD leg, measured from the actual low. CD = $63.20 − $52.70 = $10.50, so the targets are $56.71 and $59.19. The first pays $3.31: about 1.6R with the tight stop but only 0.9R with the stop below X. If the first target pays less than 1R for the stop the structure needs, pass rather than tighten the stop to make the numbers work; see the risk-reward ratio.

Size: risking 1% of a $10,000 account ($100) allows 47 shares with the tight stop ($100 ÷ $2.10) or 27 with the stop below X ($100 ÷ $3.60). Same dollar risk, different share count; the position size calculator does the math. Whether such a setup is worth trading over many repetitions is a question for trading expectancy, not for one chart.

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A trade plan for the Cypher: a falling line from C to D, a green candle and a buy triangle; green dashed lines at T2 · 0.618 CD (59.19) and T1 · 0.382 CD (56.71), the entry line at 53.40, and red dashed stops at 51.30 (tight stop) and 49.80 (stop below X), with green and red hatched boxes between T1, the entry and the tight stop; a card on the right reads tight stop: 1R = 2.10, T1 1.6R · T2 2.8R, and stop below X: 1R = 3.60, T1 0.9R · T2 1.6R.

How to draw a Cypher on TradingView

TradingView has a dedicated Cypher Pattern tool in the same Patterns group as XABCD Pattern, in the drawing toolbar on the left of the chart. Its help page describes five points placed in order, X, A, B, C and D, with B at 0.382–0.618 of XA, C at 1.13–1.414 of XA and D at 0.786 of XC, and says the levels can fluctuate and are best read as a recommendation.

  1. Select Cypher Pattern and click X, A, B and C on completed swings. Check that B is 0.382–0.618 of XA and that C is above A, within 1.272–1.414 of XA (or the tool’s wider 1.13–1.414).
  2. Drag the Fib retracement tool across XC so that 0 sits at C and 1 at X (swap the clicks if needed). Its 0.786 level is D, and the 0.886 level is the deep edge.
  3. Click D at the 0.786 level. The Coordinates settings let you set each point by bar and price, which helps when you check a ratio to the cent.
  4. Add a horizontal line at X and an alert at the 0.786 level with TradingView alerts, then wait for a candle to close.
  5. If price makes a new high above C before reaching D, C moves: redraw the pattern, and drop it if C passes 1.414 of XA.

Common Cypher mistakes

Same hypothetical Cypher, a bad day: the candle closes at $53.40 and you buy, then price slides through $51.30 and later through X. With the tight stop the loss is about $99 (47 × $2.10); with the stop below X, about $97 (27 × $3.60). Either way, a planned loss. The errors that make Cypher trading worse:

  • Measuring D from XA. The Cypher’s D is 0.786 of XC; in the example, the XA version sits $0.68 too low.
  • Accepting a C that never cleared A. Then it is a classic XABCD candidate, and the Gartley, Bat or Butterfly rules apply.
  • Forcing every breakout pullback into a Cypher. A new high followed by a dip is common; without the B and C ratios it is just a pullback, and the pullback trading strategy is the better frame.
  • Ignoring the higher timeframe. A Cypher against a strong daily trend has the wind in its face; check multi-timeframe analysis.
  • Tightening the stop to make the target look good. If only a stop inside the noise makes the trade worth taking, there is no trade.
  • Testing on a handful of hand-picked charts. Patterns with loose tolerances fit history easily; backtest overfitting explains why a rule that worked on ten charts proves little.

When it is not a valid Cypher: a checklist

Run these checks before you mark a zone. If any answer is no, there is no Cypher, whatever the zigzag looks like.

  1. Is B between 0.382 and 0.618 of XA? A B at 0.786 or deeper fails.
  2. Did C close beyond A? If C stopped below A, it is not a Cypher.
  3. Is C within 1.272–1.414 of XA (1.13–1.414 on TradingView’s tool)? A C that runs past 1.414 is too extended; if price keeps rising after you drew C, re-measure and drop the pattern once it passes the limit.
  4. Is D at 0.786 of XC, with X still intact? A close beyond X ends the pattern.
  5. Do the zone and the context agree? A 0.786 level that sits on old support, on a timeframe where the trend is not fighting you, deserves more attention than one in empty space.
  6. Did a candle close back out of the zone? Without that, there is no entry yet. For confirmation methods in detail, see trading the PRZ.