#### The ABCD pattern is a classic chart pattern used in technical analysis to predict potential price movements. It consists of four points (A, B, C, and D) that form a Elliot zigzag pattern and is often used by traders to identify potential
reversal zones and trade opportunities. Here’s a breakdown of the pattern and how to recognise it early:

Structure of the ABCD Pattern consists of 3 legs, with 2 equal leges labelled AB and CD:

#### 1) Point A: The starting point of the pattern.

2) Point B: The first significant high or low after point A.

3) Point C: A retracement of the move from A to B.

4) Point D: The final point, which completes the pattern and typically signals a potential reversal.

The idea is that you can buy when prices are low and about to rise or sell when they are high but about to fail.

#### This is the simplest harmonic pattern. It is very basic and best to be traded when it is complete (at the Point D).

Also, SL should be based on MS not Fibs.

**The Fibonacci Relationships**

#### Refer to the chart below:

a) The length of AB is usually equal to the length of CD;

b) BC retracement typically falls within the 0.618 or 0.786 Fibonacci levels of AB;

c) CD extension is typically around 1.272 or 1.618 of BC;

d) Ideally point D takes out the liquidity of the previous level with a wick;

**Steps to Recognise the ABCD Pattern Early:**

#### 1) **Identify the Initial Move (AB):**

#### > Look for a strong directional move in the market, either upwards or downwards. This forms the AB leg.

#### 2) **Wait for the Retracement (BC):**

#### After the initial move, monitor for a retracement that forms the BC leg. The retracement should ideally fall within the 0.618 or 0.786 Fibonacci levels of AB.

#### 3) **Projection for CD:**

#### > Project the CD leg by measuring the length of AB and extending it from point C. Look for the CD leg to be approximately equal to AB or an extension of BC (1.272 or 1.618).

> Ideally the time should match as well. Meaning the time taken to get from A to B should match the time taken from C to D.

#### 4) **Confirm the Pattern:**

#### > As the price approaches the projected D point, look for additional confirmation such as reversal candlestick patterns, support/resistance levels, or volume spikes.

> Apply the same strategies we use for SF and or FA taking out some liquidity level.

> Bonus factors is D lines up with a major fibonacci retracement like 0.382 or 0.618 fibonacci.

#### 5) **Entry and Exit:**

#### > Enter the trade at point D, anticipating a reversal.

> Set stop-loss orders below (for bullish) or above (for bearish) point D to manage risk.

> Target the move based on previous support/resistance levels or Fibonacci extensions.

# Real Examples

Example #1 -AB=CD BTC (2022)
#### CHART Below shows TP 1, 2, 3 based on fibonacci levels of potential support and reversal.

#### The pattern took a full four months to develop, beginning at the AB wave. Price then retraced via the BC leg, eventually rising to complete the pattern at the conclusion of the CD leg. After the pattern was completed and the Fibonacci ratios satisfied, Bitcoin price plummeted and broke down through the previous trading range.

#### CHART Below shows TP 1, 2, 3 based on fibonacci levels of potential support and reversal.

We have the 0.618 fib, then along with the 1.618 fib due to expanded flat and then the macro expanded flat, C (red)

Example #5 – ABCD of BTC July 2019
#### In 2019, the main resistance , point A was aligned with the macro 0.618 Fibonacci (refer to BTC charts in Link ) and the pullback came as an ABC move to point B. That B support level turns out to be the 0.618 fib.

Example #8-ABCD of BTC Dec 2022
#### Here is a surprise. When I looked back at this, it didn’t look like a AB=CD formation but the target confirmed it.

#### The motive wave of a 5 wave count to B makes sense, then we had a deep pullback to make point C which gave AC of 0.59 which is close enough, however if we ignore the very end of the wick and look at the dotted line, it actually gives us 0.614. 1st good sign. BD gives us 2.067 which equates to 1.786 of BC or 1.414 of AB for point D.