Harmonic pattern formation ABD where
1-AB Leg: The first leg (AB) is a significant move in the price of the asset. In the case of a long position in EURUSD, this would be a bullish move from point A to point B.
2-BC Leg: The second leg (BC) is a retracement of the initial move. The C point should occur at the 50% Fibonacci retracement level of the AB leg. This suggests a potential reversal point where buyers may enter the market.
3-CD Leg: The third leg (CD) is an extension of the initial move (AB), and it is expected to be of a similar length. In a long position, this means you expect the EURUSD to make another bullish move from point C to point D.
To trade based on this pattern, you would typically do the following:
Enter a long position (buy) when point C occurs at the 50% Fibonacci retracement level of the AB leg.
Place a stop-loss order to limit potential losses if the trade doesn't go as expected.
Set a take-profit order to lock in profits when the price reaches the expected target point D.
Remember that trading based on technical patterns like the ABCD pattern should be used in conjunction with other forms of analysis and risk management. Not all trades based on patterns will be successful, so it's important to have a well-thought-out trading plan and to use proper risk management techniques to protect your capital. Additionally, be aware that the performance of technical patterns can vary, and they are not foolproof predictors of market movements.
1-AB Leg: The first leg (AB) is a significant move in the price of the asset. In the case of a long position in EURUSD, this would be a bullish move from point A to point B.
2-BC Leg: The second leg (BC) is a retracement of the initial move. The C point should occur at the 50% Fibonacci retracement level of the AB leg. This suggests a potential reversal point where buyers may enter the market.
3-CD Leg: The third leg (CD) is an extension of the initial move (AB), and it is expected to be of a similar length. In a long position, this means you expect the EURUSD to make another bullish move from point C to point D.
To trade based on this pattern, you would typically do the following:
Enter a long position (buy) when point C occurs at the 50% Fibonacci retracement level of the AB leg.
Place a stop-loss order to limit potential losses if the trade doesn't go as expected.
Set a take-profit order to lock in profits when the price reaches the expected target point D.
Remember that trading based on technical patterns like the ABCD pattern should be used in conjunction with other forms of analysis and risk management. Not all trades based on patterns will be successful, so it's important to have a well-thought-out trading plan and to use proper risk management techniques to protect your capital. Additionally, be aware that the performance of technical patterns can vary, and they are not foolproof predictors of market movements.