1. X-A: A strong leg which ends at an important level.
2. A-B: Point B should be between 38.2 to 61.8% of X-A leg
3. B-C: The leg which makes this pattern unique. Point C should be between 1.272 to 1.414 of A-X projection. Some authors also take 1.13
to 1.414 as reference points here. I personally favor the latter but the former is the most agreed levels of projection.
4. C-D: Point D should be 78.6% of 'X-C' leg.
Pattern completes at point D so it is the most important point in the pattern. If all the above conditions are valid, a reversal is expected from this point.
# In an upward reversal is expected at point D, whereas in patterns a downward reversal is expected at point
# Normally a buy/sell order is placed at point D, expecting some sort of reversal; and targets are placed at 38.2% and 61.8% of C-D retracement.
# A complete reversal should not be expected at point D in any . Only the further price can provide confirmations about trend
Refer the following post for learning how to trade . All the other published patterns are also linked to this post.
Trade safe, be healthy
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A very nice example of cypher pattern in today's market.