One fairly easy and useful pattern for determining reversals is the AB=CD pattern.
The pattern simply looks for two rising or falling legs up or down respectively. Then one simply measures the retracement level from point B followed by the projection from C (luckily tradingview has a tool to assist with this). If these values equal a 0.618 or 0.786 retracement followed by a 1.272 or 1.618 projection respectively, the pattern is likely to indicate a reversal of the current trend. For example, above we can clearly see the pattern almost perfectly matched the required levels of 0.618 and 1.272.
However, no pattern is guaranteed, so it is always recommended to seek out confirmation. As we can see in the above example, there is bearish reversal divergence that can be seen on both RSI and MACD (dotted green lines), whereby price is rising while oscillators are falling, indicating an even greater likelihood for a reversal.
Upon confirmation of a reversal, one can then target Fibonacci retracement levels as key points of interest as can be seen above.
A nice part about this pattern is how simple it is to spot and draw out particularly with tools available on tradingview.
Hopefully you are able to use this pattern as another useful tool in your arsenal!
The pattern simply looks for two rising or falling legs up or down respectively. Then one simply measures the retracement level from point B followed by the projection from C (luckily tradingview has a tool to assist with this). If these values equal a 0.618 or 0.786 retracement followed by a 1.272 or 1.618 projection respectively, the pattern is likely to indicate a reversal of the current trend. For example, above we can clearly see the pattern almost perfectly matched the required levels of 0.618 and 1.272.
However, no pattern is guaranteed, so it is always recommended to seek out confirmation. As we can see in the above example, there is bearish reversal divergence that can be seen on both RSI and MACD (dotted green lines), whereby price is rising while oscillators are falling, indicating an even greater likelihood for a reversal.
Upon confirmation of a reversal, one can then target Fibonacci retracement levels as key points of interest as can be seen above.
A nice part about this pattern is how simple it is to spot and draw out particularly with tools available on tradingview.
Hopefully you are able to use this pattern as another useful tool in your arsenal!