This tutorial is on the ABCD pattern and the instrument used here is Nifty 50.
ABCD patterns are harmonics patterns from which swings lows and swing highs can be forecasted. The present situation is a bearish ABCD pattern. Each point denotes endpoints of the swings. A, B and C denote known swing points whereas D denotes the new swing high.
The trade setup is explained on the chart for both longs and shorts.
On breakout of point B, a swing high is taken out and point D would be our new swing high or it might be in the PRZ.
For shorts, directly you could open a position at point D but confirmation is breaking off the trendline in the shorter timeframe.
The profit-taking for the short position will be at 0.382-0.618 fib retracements of CD. The price bounced off from the 0.618 fib retracement.
Harmonic patterns give us decent risk-reward ratios for the trades. Practicing these and getting the logic would make us a lot better.
You can check out my ideas where I often use harmonics to analyze and give a trade setup.
This is just an educational post. Going long and short immediately could not be practical at all times. :)
ABCD patterns are harmonics patterns from which swings lows and swing highs can be forecasted. The present situation is a bearish ABCD pattern. Each point denotes endpoints of the swings. A, B and C denote known swing points whereas D denotes the new swing high.
The trade setup is explained on the chart for both longs and shorts.
On breakout of point B, a swing high is taken out and point D would be our new swing high or it might be in the PRZ.
For shorts, directly you could open a position at point D but confirmation is breaking off the trendline in the shorter timeframe.
The profit-taking for the short position will be at 0.382-0.618 fib retracements of CD. The price bounced off from the 0.618 fib retracement.
Harmonic patterns give us decent risk-reward ratios for the trades. Practicing these and getting the logic would make us a lot better.
You can check out my ideas where I often use harmonics to analyze and give a trade setup.
This is just an educational post. Going long and short immediately could not be practical at all times. :)