GOLD👑 (XAUUSD) KEY LEVELS TO WATCH 👀AND WHY
One of the best ways to confirm symmetry in the markets is to check price and time using two or more cluster confirmations. Another key method to compute these patterns is to use percentage change of price between market highs and market lows. Symmetry is a science by itself, and traders take great advantage of knowing the potential turning points and levels using these methods.
Symmetry is visible in all markets and in all time-frames. Symmetric rallies and declines give traders an advantage to determine the key turning points. A cluster of similar extensions and similar retracements at key price ranges, or some important levels provide insights into future significant resistance and support levels. In addition to knowing key turning points, the benefits of trading symmetric price and time cluster levels include low-risk trades.
The ABC Chart pattern and its related AB=CD Chart Pattern are prime examples of "Symmetry" in the markets. These "Harmonic" patterns help traders to identify buying and selling opportunities in all markets and in all time-frames. The ABC and AB=CD patterns are first described by H.M. Gartley in his book 'Profits in the Stock Market." (1935). The main advantages of trading harmonic patterns are that they allow traders to determine risk vs. reward ratios beforehand as they forecast key market turning points and profit targets for traders. The ABC pattern (can be a continuous or reversal pattern)
The key point in identifying an ABC and AB=CD patterns is to correctly detect the A, B, and C key inflection (Pivot) points in a chart while they are forming. These inflection points are determined from key swing highs and lows of various levels, and for its correction waves to determine distinct "swings." The potential C point is usually forecasted by the fib. retracements (0.38 to 0.618) of AB Swing. Once A, B, and C points (and AB, BC legs) are identified, a projection algorithm is applied to compute the Potential Completion Zone (PCZ). This PCZ area is where ABC pattern is expected to complete and may signal continuation of its trend in the first trend direction (AB). Following the completion of BC leg, the projections of AB and BC legs (using fib. ratios)
The swing legs (AB and BC) in ABC pattern are generally in symmetrical proportions both in price and time with consistent slopes. The tractable CD leg has a harmonic relation with symmetry for AB and BC swings. The ABC bullish structures are formed after a prolong prior down trend or consolidation trends.
A Pattern Completion Zone (PCZ) is computed using AB swing and Fibonacci ratios (50-88.6% of AB). This PCZ area is where 'C' pivot is formed at the end of BC swing and to signal completion of ABC pattern.
Trade Entry:
After ABC pattern is completed, it is advisable to wait for the pattern to confirm a reversal signal using any momentum-based indicator or price confirmation mechanisms. I use various confirmation and trade entry methods, but one of the methods is price crossing 2-bar high after 'C' in ABC Bullish pattern or a 2-bar low after 'C' in ABC bearish pattern.
Stop:
A Stop is placed few ticks below C (in Bullish) or few ticks above C (in Bearish) levels.
Targets:
The ABC Pattern targets are computed using the AB and BC swings. The height pattern (AB) is used to project target levels from (-level using fib. ratios. The first target zone is (62-79% AB) from 'C' and second target zone is (127-162% AB). A secondary target level is set at 100% AB Level .
TRADE CHARTS PATTERNS LIKE THE PROS
5 GOLDEN RULES
1: The Trade Setup
The setup is the basic conditions that need to be present in order to even consider a trade. For example, if you're a charts patterns trader, then a pattern needs to be present. Your trading plan should define what a tradable chart pattern is (for your strategy). This will help you avoid trading when a chart pattern isn't there. Think of the "setup" as your reason for trading.
2: The Trade Trigger
If your reason for trading is present, you still need a precise event that tells you now is the time to trade
There are various methos using a trigger.
A Price action
B Moving averages
C Fibonacci
D 2 bar low/high
3: The Stop Loss
Having the right conditions for entry and knowing your trade trigger isn't enough to produce a good trade. The risk on that trade must also be managed with a stop-loss order. There are multiple ways to place a stop loss. For long trades, a stop loss is often placed just slightly below a recent swing low and for a short trade just slightly above a recent swing high.
Step 4: The Price Target
You now know that conditions are favourable for a trade, as well as where the entry point and stop loss will go. Next, consider the profit potential.
A profit target is based on something measurable and not just randomly chosen. Chart patterns, for example, provide targets based on the size of the pattern. Trend channels show where the price has had a tendency to reverse; if buying near the bottom of the channel, set a price target near the top of the channel.
5: The Reward-to-Risk
Strive to take trades only where the profit potential is greater than 1.5 times the risk. For example, losing $100 if the price reaches your stop loss means you should be making $150 or more if the target price is reached.
Other Considerations
The five-step test acts as a filter so that you're only taking trades that align with your strategy, ensuring that these trades provide good profit potential relative to the risk. Add in other steps to suit your trading style. For example, day traders may wish to avoid taking positions right before major economic numbers or a company's earnings are released. In this case, to take a trade, check the economic calendar and make sure no such events are scheduled for while you're likely to be in the trade.
The Bottom Line
Make sure conditions are suitable for trading a particular strategy. Set a trigger that tells you now is the time to act. Set a stop loss and target, and then determine if the reward outweighs the risk. If it does, take the trade; if it doesn't, look for a better opportunity. Consider other factors that may affect your trading, and implement additional steps if require.
Symmetry is visible in all markets and in all time-frames. Symmetric rallies and declines give traders an advantage to determine the key turning points. A cluster of similar extensions and similar retracements at key price ranges, or some important levels provide insights into future significant resistance and support levels. In addition to knowing key turning points, the benefits of trading symmetric price and time cluster levels include low-risk trades.
The ABC Chart pattern and its related AB=CD Chart Pattern are prime examples of "Symmetry" in the markets. These "Harmonic" patterns help traders to identify buying and selling opportunities in all markets and in all time-frames. The ABC and AB=CD patterns are first described by H.M. Gartley in his book 'Profits in the Stock Market." (1935). The main advantages of trading harmonic patterns are that they allow traders to determine risk vs. reward ratios beforehand as they forecast key market turning points and profit targets for traders. The ABC pattern (can be a continuous or reversal pattern)
The key point in identifying an ABC and AB=CD patterns is to correctly detect the A, B, and C key inflection (Pivot) points in a chart while they are forming. These inflection points are determined from key swing highs and lows of various levels, and for its correction waves to determine distinct "swings." The potential C point is usually forecasted by the fib. retracements (0.38 to 0.618) of AB Swing. Once A, B, and C points (and AB, BC legs) are identified, a projection algorithm is applied to compute the Potential Completion Zone (PCZ). This PCZ area is where ABC pattern is expected to complete and may signal continuation of its trend in the first trend direction (AB). Following the completion of BC leg, the projections of AB and BC legs (using fib. ratios)
The swing legs (AB and BC) in ABC pattern are generally in symmetrical proportions both in price and time with consistent slopes. The tractable CD leg has a harmonic relation with symmetry for AB and BC swings. The ABC bullish structures are formed after a prolong prior down trend or consolidation trends.
A Pattern Completion Zone (PCZ) is computed using AB swing and Fibonacci ratios (50-88.6% of AB). This PCZ area is where 'C' pivot is formed at the end of BC swing and to signal completion of ABC pattern.
Trade Entry:
After ABC pattern is completed, it is advisable to wait for the pattern to confirm a reversal signal using any momentum-based indicator or price confirmation mechanisms. I use various confirmation and trade entry methods, but one of the methods is price crossing 2-bar high after 'C' in ABC Bullish pattern or a 2-bar low after 'C' in ABC bearish pattern.
Stop:
A Stop is placed few ticks below C (in Bullish) or few ticks above C (in Bearish) levels.
Targets:
The ABC Pattern targets are computed using the AB and BC swings. The height pattern (AB) is used to project target levels from (-level using fib. ratios. The first target zone is (62-79% AB) from 'C' and second target zone is (127-162% AB). A secondary target level is set at 100% AB Level .
TRADE CHARTS PATTERNS LIKE THE PROS
5 GOLDEN RULES
1: The Trade Setup
The setup is the basic conditions that need to be present in order to even consider a trade. For example, if you're a charts patterns trader, then a pattern needs to be present. Your trading plan should define what a tradable chart pattern is (for your strategy). This will help you avoid trading when a chart pattern isn't there. Think of the "setup" as your reason for trading.
2: The Trade Trigger
If your reason for trading is present, you still need a precise event that tells you now is the time to trade
There are various methos using a trigger.
A Price action
B Moving averages
C Fibonacci
D 2 bar low/high
3: The Stop Loss
Having the right conditions for entry and knowing your trade trigger isn't enough to produce a good trade. The risk on that trade must also be managed with a stop-loss order. There are multiple ways to place a stop loss. For long trades, a stop loss is often placed just slightly below a recent swing low and for a short trade just slightly above a recent swing high.
Step 4: The Price Target
You now know that conditions are favourable for a trade, as well as where the entry point and stop loss will go. Next, consider the profit potential.
A profit target is based on something measurable and not just randomly chosen. Chart patterns, for example, provide targets based on the size of the pattern. Trend channels show where the price has had a tendency to reverse; if buying near the bottom of the channel, set a price target near the top of the channel.
5: The Reward-to-Risk
Strive to take trades only where the profit potential is greater than 1.5 times the risk. For example, losing $100 if the price reaches your stop loss means you should be making $150 or more if the target price is reached.
Other Considerations
The five-step test acts as a filter so that you're only taking trades that align with your strategy, ensuring that these trades provide good profit potential relative to the risk. Add in other steps to suit your trading style. For example, day traders may wish to avoid taking positions right before major economic numbers or a company's earnings are released. In this case, to take a trade, check the economic calendar and make sure no such events are scheduled for while you're likely to be in the trade.
The Bottom Line
Make sure conditions are suitable for trading a particular strategy. Set a trigger that tells you now is the time to act. Set a stop loss and target, and then determine if the reward outweighs the risk. If it does, take the trade; if it doesn't, look for a better opportunity. Consider other factors that may affect your trading, and implement additional steps if require.
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The AB=CD pattern is first described by H.M. Gartley in his book
'Profits in the Stock Market.' (1935).
The AB=CD Chart pattern is a prime example of 'Symmetry' in the markets. These patterns help traders to identify buying and selling opportunities in all markets and in all time-frames.
The AB=CD patterns are reversal patterns and are shaped like a lightning bolt.
The main advantages of trading AB=CD or harmonic patterns are that they allow traders to determine risk vs. reward ratios beforehand as they forecast key market turning points and profit targets for traders.
Identification
The key point in identifying an AB=CD pattern is to correctly identifying the A, B, and C key inflection points in a chart while they are forming. These inflection points are determined from key swing highs and lows of various levels, and for its correction waves to determine distinct 'swings·. The potential C point is usually forecasted by the fib. retracements (0.50 to 0.78.6) of AB Swing. Once A, B, and C points (and AB, BC, CD legs) are identified, a projection algorithm is applied to compute the confluence levels to build a Potential Completion Zone (PCZ).
The PCZ area is where pattern is expected to complete and signal reversal of its trend in opposite direction. Following the completion of BC leg, the projections of AB and BC legs (using fib. ratios) are plotted (from C) to generate a PCZ level to find D point. Once 'D' point is identified, AB=CD pattern is complete.
Conditions:
The swing legs in AB=CD pattern generally are symmetrical in both price and time with consistent slopes. The CD leg has harmonic relation and symmetry with AB leg BC swings. The AB=BC bullish structures are formed after a prolong prior down trend or consolidation trends, whereas bearish AB=CD patterns are formed after a prior uptrend.
How to Trade:
Build a confluence area of AB and CD projection legs (like 78-127%AB, 127-162%BC) to identify a PCZ (Price completion zones) for a reversal. It is wise to wait for the pattern to complete and confirm a reversal signal using any momentum-based indicator or price confirmation mechanisms. I use various confirmation and trade entry methods but one of the methods is price crossing 2-bar high after 'D' together with Fibonacci as an EL ( Entry Level) in AB=CD Bullish pattern or a 2-bar low after 'D' in conjunction with ( Entry Level) in AB=CD bearish pattern.
The Potential Reversal Zone (PRZ) is formed at 1.27 of AB swings, 1.62 of XA and a distinct 2.62 to 3.62 of BC. These extension patterns form when prices trade outside of XA swing. When the price closes below X, the pattern may be signalling a further correction to 1.62 of XA level to form "Crab" pattern.
Trade: Once the Crab pattern is completed at the PRZ level, look for price-action to confirm the reversal.
For bullish Crab patterns, look for a "wide range bar" or "higher highs" from the PRZ level to confirm the Crab pattern.
Enter a "long" trade above the confirmation bar.
For bearish Crab patterns, enter a "short" trade below the low of the confirmation (lower low) bar.
Stop: The bullish Crab pattern fails if prices close below the PRZ levels. Place a "stop" order below the low of the PRZ level.
For bearish Crab patterns, place a "stop" order above the high of the PRZ levels.
Target: The bullish Crab patterns result in excellent profits. Set targets at "X", "B" and "C" levels. Similarly, for the bearish Crab patterns set targets at "X", "B" and "C" levels.