ABCD trading pattern is a trend that stocks take in the market, observable on price charts. The sequence of events follows a particular harmonic pattern in market movement that can be helpful to traders in predicting future price swings. A bullish ABCD pattern follows a downtrend and means that a reversal to the upside is likely.

IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority. Discover the range of markets and learn how they work – with IG Academy’s online course. Traders know that the market is likely to reverse direction after a pronounced trend. Generally, volume tends to be low while a stock is consolidating and you ABCD Chart Pattern ought to consider this a red flag when using this pattern. So if you have a stop of 10 cents from your entry, you would want to make at least 20 cents or more in profit. For both versions, the lines AB and CD are called the legs while BC is known as the retracement or correction. When shares make a new high then you want to look for resistance for a possible short entry.

Advanced technical analysis

In fact, this three-drive pattern is the ancestor of the Elliott Wave pattern. Our gain and loss percentage calculator quickly tells you the percentage of your account balance that you have won or lost. In our crypto guides, we explore bitcoin and other popular coins and tokens to help you better navigate the crypto jungle.

A readily discernible appearance and user-friendly interpretation make the ABCD an attractive indicator for active market technicians. FXCM is a leading provider of online foreign exchange trading, CFD trading and related services. When autocomplete results are available use up and down arrows to review and enter to select. Touch device users, explore by touch or with swipe gestures. Yes, ABCD is considered as the simplest form of harmonic pattern. Set stop-loss below point C, if the price goes below C then sell and accept the loss gently (don’t seek revenge).

Trade Management Tips to Improve Your Trading

One of the best ways to read an abcd pattern, or any pattern in trading, is to pay close attention to the volume signature that accompanies the pattern. The fractal indicator is based https://www.bigshotrading.info/ on a recurring price pattern that is repeated on all time frames. The indicator marks the frequent patterns on the chart, which provide traders with potential trade opportunities.