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The indicator will look for divergent points between the rising highs and falling… Then, the price falls from B to C and finally rises again from C to D. At this point, when the pattern is confirmed with Fibonacci rules, a reversal is likely to occur. With that in mind, let’s see two examples of the ABCD pattern – bullish and bearish. Take advantage of all the educational resources available with your broker.

  • When you get these characteristics on the graph, you can expect the price to reverse again creating a new bearish run.
  • When a breakout occurs from a range, the indicator will begin coloring the candles.
  • We’re also a community of traders that support each other on our daily trading journey.
  • The relationship between time and price level can be observed through the analysis of price charts and technical indicators.

After that, measure the CD line and make sure it reaches 1.272 level. Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more.

And gain in-depth knowledge on how to use the indicators to find trends. Though, “experience is the best teacher” most times. The dmi indicator can be used in the 1234 reversal pattern when trading forex. The best time to trade is right after a “strong currency” pairs up with another. Forex traders have adopted the 1234 reversal strategy and are profiting from using it. Any information contained in this site’s articles is based on the authors’ personal opinion.

Psychology of Trading: How Emotions Affect When to Enter a Forex…

Similarly, point B should be the 0.618 retracement of drive 2. 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. Yang’s analysis was based on a valuation model, with the $170 price target derived from 24 times the FY25 EPS of $6.97E.

  • Targets can be set for specific user-set conditions between two series of values, with the script being able to display targets for two different user-set conditions.
  • The structure of both patterns looks similar, but the Three-Drive has three legs (A, B, and C) known as drives.
  • And so when the CD leg reaches an equivalent distance to the AB leg, we expect a reversal of the CD price move.
  • It all depends on at what point you desire to close your position.
  • We all want to make money and minimize our losses when trading.

We have entered the market at point D, and the stop-loss is placed just below the D point. As you can see, we went for smaller stops, and there is a reason behind it. If the price action goes below point D, the pattern automatically gets invalid.

What is the ABCD pattern?

It is common for traders to wait till +dmi and -dmi crosses over before making a trade. However, most traders do not think it wise to depend solely on this indicator. It’s essential to consider other influences and trend indicators before making a trade. Forex traders confirm this reversal strategy through the use of technical indicators like DMI and MACD.

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In my tests, I used 1% because this pattern occurs so frequently, a larger percentage is not necessary. The same is in force with the bullish ABCD pattern. The difference though is that everything will be upside down. You can select the length as an input to how many bars to look back for the whole calculation. The green bars represent the bullish values and the red bars the bearish values.

Trading The Bullish & Bearish AB=CD Harmonic Pattern

Stop Loss is set just below point D, and the landmarks for profit-taking are points C, A, and above if there is a strong upward movement. It provides deeper insights into trends by standardizing the SuperTrend with respect to its upper and lower bounds, allowing traders to identify potential reversals and… There are dozens of bullish chart patterns, not to mention dozens of ways to trade them.

The pattern develops when the line AB is equal to the line CD. The lines AB and CD are known as legs, while the line BC is called correction or retracement. Technically the price has extended above – and away from – its 50% midpoint of the move down from the 2021 all-time high of $69,000.

The above numbers are based on at least 1,741 perfect trades. This time, we have pointed the proper location of the stop loss order with the thick red line on the image. When you get these characteristics on the graph, you can expect the price to reverse again creating a new bearish run.

Then, after drawing the ABCD pattern, you need to look for point D, where you enter a position in the opposite direction of the CD line. Additionally, it is always important to be aware of market conditions, and price action behavior, and include fundamental analysis in your trading strategy. Once you have identified the ABCD chart pattern, you need to draw it on a trading chart, find the appropriate levels to set entry points, stop loss, and take profit orders. By using the built-in ABCD indicators, we were able to identify this geometric pattern with two Fibonacci rules. The BC line is 61.8% retracement level of the AB line. Moreover, the CD line is the 127% extension level of the BC line.

How to trade the ABCD pattern

This is an example of a bullish ABCD pattern. Ideally, Point C should be Fibonacci retracement between 61.8% to 78.6% of the A-B leg. Point D should be a Fibonacci extension between 127% to 161.8% abcd forex pattern of the B-C leg. Take profit can be at the 38.2% and 61.8% Fibonacci retracement of the C-D leg. There are a total of three price moves in the ABCD pattern. These are called the leg of AB, the leg of BC, and the leg of CD.


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Margarida Cunha

Eu chamo-me Margarida, tenho 12 anos e frequento a Escola de Línguas Royal College desde os 6 anos. Entrei no “Junior 1” e neste momento estou no “Teens 3”, e o meu objetivo é fazer todos os níveis de Inglês até aos exames internacionais (FCE, CAE e CPE).

Eu adoro andar nesta escola, porque estou a aprender muito sobre a língua Inglesa. Nas aulas só falamos Inglês e isso é essencial para uma boa aprendizagem. Fazemos muitos amigos e as Professoras Gaby e Patrícia são fantásticas e muito profissionais, pois incentivam-nos a fazer mais e melhor.


Mafalda Alves

Estudar no Royal College foi a melhor decisão que os meus pais, na altura, tomaram. No meu caso, acompanho o trabalho da Prof. Patricia e da Prof. Gaby desde que tinha 7 anos e posso dizer com certeza que são profissionais excecionais. Para além da aprendizagem irrepreensível e de qualidade, ajudaram-me a crescer enquanto pessoa porque sempre mostraram o seu lado humano enquanto ensinavam, característica rara no ensino em Portugal, mas que, na minha opinião, faz toda a diferença. Ao marcarem a diferença, distinguem-se de todas as outras escolas de ensino de línguas ao, e volto a dizer, acompanharem os alunos de perto e de forma personalizada. Se cheguei aqui, no meu percurso académico, deve-se a estas professoras. 

Gabriela Teixeira

Frequentar o Royal é estar dentro de algo que nos conduz a uma imensidão de conhecimentos que vão muito além da aprendizagem de uma língua estrangeira. Guiados pelas teachers, percorremos os caminhos do conhecimento global. A partilha de momentos vividos pelos colegas são uma mais valia no que concerne ao alargar dos nossos horizontes. Royal é sinônimo de conhecimento, cumplicidade e diversão. Obrigada família Royal.

Jéssica M.

Quando cheguei ao Royal College não sabia absolutamente nada de inglês. Lembro-me que tinha memorizado duas frases em inglês caso alguém me perguntasse algo, e estas eram: “I don’t speak english”, e “I don’t understand”.
Como é natural, sabendo apenas isso, comecei pelo nível 1. Melhorei bastante, estou agora no meu último ano, o FCE. O ano mais desejado por mim! O progresso que eu fiz é notável, consigo perceber quando outras pessoas falam para mim sem ser na minha língua nativa, a ver séries/filmes é muito mais interessante, ouvir músicas, etc.
Aprender outras línguas abre novas oportunidades para o nosso futuro, e também vamo-nos sentir realizados a nível pessoal.