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ABCD Pattern - Educational series 1

NSE:NIFTY   Nifty 50 Index
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Hi All ,
I'm just sharing info on pattern : ABCD pattern where price moves down from A to point B than rises to point C and again falls to point D , AT point D we can look out for potential reversal .

1)Lets say AB is down leg , And BC is retracement which is 0.618 or 0.786 of AB
i.e Length or height of BC = ( 0.618 or 0.786 ) x length of AB

2) After BC leg there is another leg down CD which is 1.27 or 1.618 of BC
i.e Length or height of CD = (1.27 or 1.618 ) x length of BC

Than after all these mathematics we can lookout for Point D as potential reversal zone (short form PRZ) i.e since in the above we consider AB and CD as down move , than at point D we should be looking for buying opportunity .

RULES :
1)Wait for buying signal , Just that 1.27 extension is complete doesn't mean its a buy it can extend to 1.618 also.

2) Approximate values may work i.e instead of 0.61 , it can be 0.59 or 0.63 but it should be any thing like 0.41

Finally Remember the ratios :

BC= 0.61 or 0.786 (AB)
CD = 1.27 or 1.618 ( BC )
Point D is potential reversal zone


Comment: Small correction in Rule number 2 :
Please read "it should not be" instead of "should be"

2) Approximate values may work i.e instead of 0.61 , it can be 0.59 or 0.63 but it should NOT be any thing like 0.41

Comments

Good , I am happy that people are transferring their knowledge to others
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very good,
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