For both the bullish and bearish versions of the ABCD chart pattern, the lines AB and CD are known as the legs while BC is called the correction or retracement.
If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach the 0.618 level. Next, the line CD should be the 1.272 Fibonacci extension of BC.
Simple, right? All you have to do is wait for the entire pattern to complete (reach point D) before taking any short or long positions.
If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach the 0.618 level. Next, the line CD should be the 1.272 Fibonacci extension of BC.
Simple, right? All you have to do is wait for the entire pattern to complete (reach point D) before taking any short or long positions.