Bullish AB=CD Pattern: A very profitable setup (Example)
The bullish AB=CD is a measured move down chart pattern except that the turns are located using Fibonacci ratios.The pattern correctly predicts point D 57% of the time. By using the next higher Fibonacci ratio in the measure rule, you can boost the accuracy somewhat, to 65%. What Is an ABCD Pattern? Reflects the common, rhythmic style in which the market moves. A visual, geometric price/time pattern comprised of 3 consecutive price swings, or trends—it looks like a lightning bolt on price chart. A leading indicator that helps determine where & when to enter and exit a trade.Why is the ABCD Pattern important? include the U.S. Dollar (USD). Helps identify trading opportunities in any market (forex, stocks, futures, etc.), on any timeframe (intraday, swing, position), and in any market condition (bullish, bearish, or range-bound markets) All other patterns are based on (include) the ABCD pattern. Highest probability trade entry is at completion of the pattern (point D). Helps to determine the risk vs. reward prior to placing a trade. Convergence of several patterns—within the same timeframe, or across multiple timeframes--provide a stronger trade signal.
Comment:
Step 2: AB, then find BC
Point C must be lower than point A
In the move from B up to C there can be no lows below point B, and no highs above point C
Point C will ideally be 61.8% or 78.6% of AB
In strongly trending markets, BC may only be 38.2% or 50% of AB
Point C must be lower than point A
In the move from B up to C there can be no lows below point B, and no highs above point C
Point C will ideally be 61.8% or 78.6% of AB
In strongly trending markets, BC may only be 38.2% or 50% of AB
Comment:
Setp 3: BC, then draw CD
Point D must be lower than point B (market successfully achieves a new low)
In the move from C down to D there can be no highs above point C, and no lows below point D
Determine where D may complete (price) ---insert fib & abcd tool tutorial link
CD may equal AB
in price
CD may be 127.2% or 161.8% of AB in price
CD may be 127.2% or 161.8% of BC in price
Point D must be lower than point B (market successfully achieves a new low)
In the move from C down to D there can be no highs above point C, and no lows below point D
Determine where D may complete (price) ---insert fib & abcd tool tutorial link
CD may equal AB
in price
CD may be 127.2% or 161.8% of AB in price
CD may be 127.2% or 161.8% of BC in price
Comment:
Step 4: Determine when point D may complete (time) for additional confirmation –insert fib time tool link
CD may equal AB in time
CD may be 61.8% or 78.6% time of AB
CD may be 127.2% or 161.8% time of AB
CD may equal AB in time
CD may be 61.8% or 78.6% time of AB
CD may be 127.2% or 161.8% time of AB
Related Ideas
Point A is a significant high
Point B is a significant low
In the move from A to B there can be no highs above point A, and no lows below B