How to understand the butterfly indicator and its patterns?

<p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 1rem; font-size: 16px; color: rgb(33, 37, 41); font-family: Aeonik, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" id="isPasted" class="forexqa-img-container"><img src="https://prod-forexqna.s3.amazonaws.com/uploads/froala_editor/images/1744095394613.png" alt="What is a butterfly pattern" width="782" height="447" style="box-sizing: border-box; max-width: 100%; height: auto; padding: 2.5rem 0px; width: 730px;" class="fr-fic fr-dii fr-draggable forexqa-img"></p><p>Image Source</p><p>The butterfly patterns are Fibonacci retracement lines that can identify potential trend reversals in the forex market. It is formed by four key points (X, A, B, C, and D) that connect to create a specific geometric structure in the shape of a butterfly. Here's a breakdown of the points:</p><ul style="box-sizing: border-box; padding-left: 2rem; margin-top: 0px; margin-bottom: 1rem; font-size: 16px; color: rgb(33, 37, 41); font-family: Aeonik, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(255, 255, 255); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial; list-style-type: circle;"><li style="box-sizing: border-box; font-size: inherit; color: inherit;">XA: This is the initial leg, representing a strong directional move.</li><li style="box-sizing: border-box; font-size: inherit; color: inherit;">AB: This is a retracement leg, typically following a Fibonacci ratio (often 0.786) of the X-A leg.</li><li style="box-sizing: border-box; font-size: inherit; color: inherit;">BC: This is a corrective leg, with a variable length but often shorter than A-B.</li><li style="box-sizing: border-box; font-size: inherit; color: inherit;">CD: This is the final leg, ideally reaching a specific Fibonacci extension zone (often between 1.618 and 2.618) of the B-C leg. This projected zone is the potential reversal area.</li></ul><p>The price movements between X-A and C-D form the butterfly wings. Point B acts as the body, with the A-B and B-C legs forming the wings. In a bullish butterfly pattern, the C-D leg extends upwards, potentially signaling a reversal to an uptrend and vice versa for a bearish butterfly pattern.</p><p>The butterfly pattern is based on three important characteristics –</p><p>Fibonacci ratios: The pattern relies on specific Fibonacci retracements and extensions to validate its structure.</p><p>Reversal signal: The completion of the pattern suggests a potential reversal of the prevailing trend.</p><p>Two variations: The butterfly pattern comes in two forms: bullish (indicating a potential trend reversal upwards) and bearish (indicating a potential trend reversal downwards).</p>