Upon all XABCD pattern, to have an authentic pattern. Say or even the or the rest. It must consist atleast the Pattern.
In this example, we have a pattern on the here on the EURUSD .
pattern consist of 3 legs/phases:
is a reversal pattern that helps you identify when the price is about to change direction.
The idea is that you can buy when prices are low and about to rise, or sell when they are high but about to fall.
1. AB leg/phase - first leg
2. BC leg/phase or C point.
Price "must" retrace atleast the 38.20%. Ideal price retracting on the 61.80% - 78.60%.
3. CD leg/Phase - Final leg
Price will extent from the C point and breaking the B point.
Usually with a 127.20% - 161.80% CB Fib extension. Zone we want to enter for SHORT! Stops could be above the 161.80% CB Fib extension.
4. Target Profit Points:
38.20% AD leg - TP 1
50% AD leg- TP 2
61.80% AD leg - TP 3
If unsure place at 61.80% and monitor closely how price reacts on each level. If price struggles to break through any one of them, then you can close your trade.
ENJOY! Sooner or later I will also be posting my personal pattern ratios on the different patterns. It is said personal because upon on my backtesting I think that a certain must have this kind of rules and ratios and i am strict about it.
Be great and be good!