Hi, This idea is about the very promising ABC pattern and the most optimal ways to enter into this pattern.
✅ABC Pattern This is considered as a continuation pattern.
There has to be a strong trend up/down in the background.
Wave A: Minor correction against larger trend, usually not more than 5-10%
Wave B: Another attempt to push the price higher but could not break the previous highs
Wave C: breaks the low A but has less momentum than wave A. Weak stops are taken below A
I am presenting four techniques of entering into this pattern, in the anticipation of a continuation of the prevailing trend. The techniques used, however, depend upon the traders' appetite and temperament.
Let's start..
✅Minimum Risk Entry
>The entry point is near the low C >C should have less momentum than A >Price barely breaks the low A >There are wicks at the low of Candles at C >Stop is placed under the low of C, so less risk more reward potential
✅Confirmed Entry
>Entry is at the break of swing high B >The price makes a higher-high so structural change is confirmed >The break often comes with good volumes & strong closing candles >SL under C is wider than 1 in this case >This technique is used when, in wave C, there are few weak candle closings below A
✅Trendline Entry
>Entry is at the break of TL >The break often comes with good volumes & strong closing candles >SL is wider than 1 but lesser than 2. So less riskier >This technique is used when, in wave C, there are few weak candle closings below A
✅ABC-W Entry
>A unique entry technique >The price breaks deeply below B and then retests at W >At this point it seems that price will continue down but >The price could not hold down and again breaks out of W, giving us a breakdown failure entry >You would see a usually sharper continuations as many traders, who entered short positions, would start exiting in a hurry
Stop loss in all the cases is placed under the low of wave C and trailed as per traders' time horizon. These are relatively small corrective patterns so you can expect sharp continuations and take targets measured equal to the strong impulsive move in the background.
I hope it was useful. Thanks for reading. @Bravetotrade
Comment
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Here are a few examples of abc pattern
Same chart, different technique
Same pattern can be seen and traded in a downtrend also. Thanks.
One of the most important patterns in analysis. Nice write up. I prefer trend line confirmation.
Bravetotrade
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@vanathi, Thanks. Yeah trend line confirmation is really a good method. I prefer it when there are few weak closings below the A point.
tadavimitesh
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sir stock identy ke liye koi scanner ho to free vala batana sir
Bravetotrade
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@tadavimitesh, It depends upon for what do you want to scan. Intraday or fundamental etc.
invest_shares
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This correlates very much to the Elliott wave where ABC is termed as a corrective wave which unfolds after an impulse. These strategies can be used very well for swing trading. Thanks much for sharing!!