![abcd stock pattern abcd stock pattern](https://www.profitf.com/wp-content/uploads/2014/12/1-abcd-bullish-900x284.png)
My first target is 1:1 on my risk, my second target is equal price from target 1. In the example below, my stop is just below the pennant shape. Your stop should be placed where support was first tested in the pennant. I’m fine with this because I want to be sure that I don’t get stuck in a false breakout. In the example below I miss part of the move as I wait for the close of the candle that breaks resistance. Normally where the trend lines close in on each other. Your entry point will come as volume increases and there is confirmation of a break out of resistance. There will be a series of lower highs and higher lows. After a bullish run up you will wait for the pennant shape to form. You trade a Bull Pennant in a similar way to a Bull Flag.
![abcd stock pattern abcd stock pattern](https://s3.tradingview.com/3/3SZE9KuF_big.png)
Knowing this can help confirm the pattern. The volume then increases again off the reversal of C, slows as it nears D and increases as the reversal begins to take shape off D.Ĭonsolidation periods have lower volume and breakouts have higher volume. A rally from A to B will have high volume, with the consolidation (BC) at a lower volume. When considering this trading pattern it is good to look at other technical indicators. The points of resistance off the reversal are point B and C, and then finally point A. When price hits point D it typically forms a strong uptrend reversal. The third leg (CD) then forms after a second strong downtrend of a similar size of AB. The second leg (BC) forms by a smaller retracement forming the C. The first leg (AB) is drawn from point A to B in a strong downtrend. There are 3 legs (AB, BC, CD), and 4 points (ABCD). These trading graph pattern look like a “lightning bolt” trending downward. The Bullish ABCD chart pattern is similar to an ABC pattern in that it is a harmonic trading pattern.īullish ABCD trading patterns form when a down trend retraces up and then pulls back creating a second, equal downtrend. Price does eventually trend higher than the length of AB and I reach Target 2 and take profit on the remaining position. Note if I put my stop all the way up to T1 I would get stopped out and miss T2. When price reaches Target 1 (T1) I reduce my position by half and move my stop halfway to my T1 level. I have copied the leg from A to B and used it to measure my second target. I have decided to make the resistance at pivot B as my first target. I miss part of the move but that’s ok, I want to make sure the pattern has a chance to complete. In the example below I chose to wait for some resistance (on the left) to clear before I entered. You can use this information to find a larger target or a secondary target. The uptrend from C is often roughly the same size as the trend from A to B. We know that the next major resistance level is point B in the pattern, you can choose this as your target or first of 2 targets. You can enter the trade at this point and place your stop loss just below C as this is the support level.ĭon’t enter the trade if there are any unrelated resistance levels, wait for those to be broken. Once you have a close of the first green candle reversing off C you have confirmation of the reversal. To trade a Bullish ABC pattern, wait for confirmation of a reversal at point C.