To execute a bearish reversal strategy with the ABCD pattern, the trader sells an asset following completion of the C-D leg.
![abcd stock pattern abcd stock pattern](https://bpcdn.co/images/2016/05/grade10-bullish-ABCD.gif)
![abcd stock pattern abcd stock pattern](http://i885.photobucket.com/albums/ac53/naughtypip/13may2010.jpg)
The most commonly applied Fibonacci retracement levels in the ABCD pattern are 38.2% (0.382), 50.0% (0.50) and 61.8% (0.618). In terms of the ABCD pattern, corrections are frequently measured in terms of Fibonacci retracements. Also referred to as a correction, a retracement is viewed relative to a prevailing trend and can occur on any time frame. As a general rule, a directional market is in the midst of a trend.Ī retracement in price is a pullback from a periodic high or low. Directional moves are commonly referred to as "legs" and may be quantified on any duration chart, from one minute to yearly. In doing so, the pattern has two primary components: Directional MoveĪ directional move in pricing represents a significant bullish or bearish change in asset valuations. The formation consists of three phases: an initial directional move, a pullback and a subsequent continuation.Īs a rule, valid ABCD patterns occur within trending markets. Classified as a harmonic chart pattern, the ABCD is a geometric shape that signals either trend extension or reversal. The ABCD pattern is among the most simple formations found on a pricing chart.
![abcd stock pattern abcd stock pattern](https://i.pinimg.com/originals/6b/2d/a3/6b2da3e8481975731fbd3b937a1cc11b.gif)
A readily discernible appearance and user-friendly interpretation make the ABCD an attractive indicator for active market technicians. One of the most popular formations is the ABCD pattern. Whether you're trading futures, forex, bonds or equities, chart patterns may be implemented on any product and time frame. In the study of Japanese candlestick or open-high-low-close (OHLC) pricing charts, patterns are often used to evaluate market state or to craft trading decisions. In the contemporary marketplace, chart patterns are a favorite tool for legions of participants.