In this case, the Terminal Price Bar hammer-tested both point D and the 161.8 projection of BC. Furthermore, the 161.8 projection of BC along with point D define the Potential Reversal Zone. In the following chart, the completion of the pattern takes place at point D, where AB=CD. The entry in the trade, whether buy or sell, is triggered once the pattern is in place. ![]() Trading the AB=CD pattern involves rules for entering the trade, locking potential profits and exiting with minimum loss if the market follows the opposite direction. The CD leg required much more time to complete compared to the AB leg, as this was of a considerably shorter time duration. Again, all conditions are met, with the exception of the time factor. Here is another example of a real price chart this time showing a bullish AB=CD pattern. It should be emphasised again that time is not a very reliable factor. The leg CD took more time to form compared to leg AB. The only condition that came close, but is not 100% fulfilled, is the time factor. ![]() The Reversal Bar, also known as the Terminal Price Bar, tested both lines (161.8 of BC and AB=CD). Also, notice the Potential Reversal Zone which fulfils both required conditions: 161.8 projection of BC and AB=CD. Point D is defined by the completion of the CD leg that satisfies the condition AB=CD. If we take a closer look at a real price chart, we can clearly see that the example below qualifies as a perfect bearish AB=CD pattern. Similarly, the same rules apply when identifying the perfect bearish AB=CD pattern: AB, CD) to complete is to simply count the corresponding candlesticks that comprise each of the legs. One way to measure the time required for each leg (i.e. CD terminates at the 1.618 projection of BCĮven though time is not the most reliable factor in technical analysis, it is nevertheless an element of the unique specifications of the perfect AB=CD pattern.When the structure conforms to the following specifications, then it qualifies as a perfect bullish AB=CD pattern. The result is what is known today as the AB=CD pattern. ![]() Carney, refined the pattern by assigning new elements and specific Fibonacci ratios to confirm the formation. One of the authors on the subject, Scott M. What these patterns have in common is the adoption of Fibonacci ratios as a prerequisite. Browsing the internet, one comes across many different variations of the original harmonic pattern. So it’s inevitable that the original Gartley 222 pattern would undergo some developments as well – after all, the only thing that remains constant is change. Gartley’s 1935 book, Profits in the Stock Market, a lot has changed. Since the introduction of harmonic patterns in Harold M.
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