Harmonic Pattern, AB=CD Pattern, Forex Strategy
📖 What is a AB=CD
Pattern?
The AB=CD is a harmonic reversal pattern that
identifies potential turning points based on Fibonacci symmetry in price
movements. In a bearish AB=CD, the pattern signals the end of short term
trend and potential start of a reversal.
This strategy focuses on the AB=CD variant with retracement
AB = 0.70 and extension CD = 1.41, which indicates a stronger
exhaustion and short term sharper reversal.
✅ Pattern Components on Chart:
- Point
A to B: First bullish leg.
- Point
B to C: Retracement to 0.70 Fibonacci level of AB.
- Point
C to D: Final bullish leg ending at 1.41 Fibonacci extension of BC.
Once point D is formed, a short-term reversal to the
downside is expected.
📊 Example Charts:
- CADJPY
– H1 Chart (12-05-2025): Bearish AB=CD Pattern (0.70, 1.41) formed at
resistance.
🔍 Key Confirmation
Factors:
- Pattern
completes at or near a known resistance zone. 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 Bearish pattern on chart.
- Confirm
point D completes at 1.41 extension of BC, you can use ZUPp MT4 Indicator
attached below.
🎯 Entry
✅ Enter after formation of AB=CD
pattern of (0.70,1.41) on chart and wait price to come 50% of CD line. Once
price reach 50% CD line entry position.
📉 Stop Loss
✅ Place stop-loss will be at
point just above below C on buy entry and just above point C for sell entry.
💰 Take Profit
✅ Use Fibonacci expansion
levels of CD leg:
- First
TP: 1: 1.5 risk-to-reward ratio
- Second
TP: 1:2 risk-to-reward ratio
📘 Example Trade: Bearish
AB=CD Setup
- Pair:
CADJPY (H1)
- Point
D (Completion): 106.25
- Entry:
104.76
- Stop
Loss: 103.16
- Take
Profit:
- TP1:
107.06 (1:1.5 risk reward Ratio)
- TP2:
107.82 (1:2 risk reward Ratio)
✅ Conclusion
The Bearish AB=CD (0.70, 1.41) is a highly effective
harmonic pattern to spot short term trend reversals at exhaustion zones.
- Always
wait for point D to align with key confluences.
- Maintain
strict risk management.
