Harmonic Pattern,
AB=CD Pattern, Forex Strategy
📖 What is a AB=CD
Pattern?
The AB=CD is a harmonic trend continuation pattern
that identifies potential turning points based on Fibonacci symmetry in price
movements. In a AB=CD, the pattern signals the end of short term trend
and potential start of new trend.
This strategy focuses on the AB=CD variant with retracement
AB = 1.41 and extension CD = 0.70, which indicates a stronger
exhaustion and continue to main trend.
✅ Pattern Components on Chart:
- Point
A to B: First Bearish leg.
- Point
B to C: Main Trend to 1.41 Fibonacci level of AB.
- Point
C to D: Final bearish leg ending at 0.70 Fibonacci extension of BC.
Once point D is formed, trend continues to upside is
expected.
📊 Example Charts:
- AUDCHF
– H1 Chart (07-05-2025): Bearish AB=CD Pattern (1.41, 0.70) formed.
🔍 Key Confirmation
Factors:
- Pattern
completes at or near a known 0.70 Fibonacci support zone on chart. You can
use attached MT4 Indicator to identify pattern.
🔧 How to Trade the AB=CD
Pattern
🕒 Time Frame
✅ 15-Minutes Chart to 4 Hour
Chart
Lower than 15-Min time frames may generate less accurate harmonic completions.
🛠️ Trade Setup
For a Buy Trade:
- Identify
a valid AB=CD pattern on chart.
- Confirm
point D completes at 0.70 extension of BC, you can use ZUPp MT4 Indicator
attached below.
🎯 Entry
✅ Enter after formation of AB=CD
pattern of (1.71,0.70) and enter into trade.
📉 Stop Loss
✅ Place stop-loss will be at
point just above below B on buy entry and just above point B for sell entry.
💰 Take Profit
✅ Use:
- First
TP: 1: 1.5 risk-to-reward ratio
- Second
TP: 1:2 risk-to-reward ratio
📘 Example Trade: Bearish
AB=CD Setup
- Pair:
AUDCHF (H1)
- Point
D (Completion): 0.5271
- Entry:
0.5286 or better
- Stop
Loss: 0.5225
- Take
Profit:
- TP1:
0.5378 (1:1.5 risk reward Ratio)
- TP2:
0.5409 (1:2 risk reward Ratio)
✅ Conclusion
The Bearish AB=CD (1.41, 0.70) is reversed pattern of AB=CD (0.70, 1.41) and it also highly effective trend
continuation harmonic pattern to spot short term trend reversals and then
continuation
- Always
wait for point D to align with key confluences.
- Maintain
strict risk management.
