Formation Pattern for long and short opportunities
known to many traders as the ABCD pattern
The formation pattern is a technical pattern. It sets up by identifying an intermediate high or low. In a uptrend a line is drawn from the intermediate point low to the next high then to the next price correction low. From that second low point a price target or goal is outlined on the chart. The opposite occurs in short candidates. See the charts below:
ABCD pattern
The Bullish Butterfly Pattern contains a bullish ABCD pattern preceded by a significant low (the X). Fibonacci extension ratios converge at point D. Point D is the Fibonacci extension of BC and XA. The swing from A to D is a 127.2% or 161.8% extension of XA. Note: D must be below X. Sounds confusing? Not really, after a short period of time, a trader can glance at a chart and quickly spot a Bullish Butterfly. The diagram below explains this pattern. Also see the Membership Info page for additional trades using this pattern
The Gartley Pattern can be bullish or bearish
for long or short trades
The Bullish Gartley is geometric in shape and comprises four consecutive price swings. It contains a bearish ABCD preceded by a significant low (X). This pattern identifies potentially higher probability buying opportunities in any market and any time frame. See the diagram below and the Membership Info page for examples of actual trades with this pattern.
The pattern of “diamond” is a reversal pattern and is formed on the bottom or the top of the trend. Although exceptions to the breakdown of the trend lines are the same!
It should also be noted that in fact the figure of “Brilliant” is formed in those moments when the price just does not “know” where to go further and is a 2 in this joint triangle: expanding (expands formation) and the usual - a symmetrical triangle, and hence boundaries of the diamond are the lines of the triangle.
That’s why we in fact can not be aware that these figures are formed, but knowing the patterns of trade in the forex chart patterns, to enter the market correctly and make a profit.
The opening of trading positions to buy:
Trade within the pattern, “Brilliant” is not desirable and not recommended!
Therefore, we will sell it on the breakdown of the trend lines formed by the pattern.
An example of a pattern “Brilliant” or “Diamond” on GBPUSD (H1):
Pattern of "Brilliant" in GBPUSD (H1)
1) Conclude a deal on one of the following:
a) on the breakdown of the trend line (or better even after closing the candle above the trend line, which price breaks).
b) above the highest point of the diamond
s) above the top of the latest formations
d) to retest a broken line pattern Brilliant
But I would like to recommend the opening of transactions is (a) and (g)!
2) Stop-loss set at least the last diamond pattern or a minimum of generally very graphic shapes.
3) Take-profit set to a distance equal to the height of the figure “Brilliant” deferred from the point of breakdown formation or partially close the transaction on the same level as the rest position of the swap at breakeven.
4) Of course I recommend to consider when signing a deal appropriateness of its opening, as if it does not satisfy the rules of Money Management, then such transactions are better omitted.
