The ABCD Pattern is a very simple pattern that you exploit to generate easy profits.
Why easy profits?
Because when you are able to recognize the ABCD Pattern, it’s extremely likely that your trade will reach the Take-Profit level.
Moreover, you cannot make a mistake when you set the Take-Profit level.
Why?
Because in an ABCD Pattern, you will trade the CD movement…
and since you already know the AB and BC movements, you can easily set the Take-Profit level and be sure that it is correct!
In the trade discussed below, you can learn with a real trading example on Apple Stock how to Recognize and Trade the ABCD Pattern (also referred as a 1-2-3 movement).
Trade setup – 24 Apr 2020
Apart from the resistance level displayed by the Levels and Zones, which might prevent the price from moving significantly higher, we have a valid buying setup on this AAPL TradingView chart.
In particular:
-
- We have two bottoms with the most recent being the highest (displayed by the Bottoms Tops Signal indicator)
- The RSI Exhaustion moves higher as well (supports the movement of the price)
- The RSI Exhaustion is bearish exhausted, so the price should not move any lower
Trade update – 27 Apr 2020
The price has moved higher but, as we anticipated, the resistance is preventing it from moving even higher.
Let’s see what happens going on.
Trade update – 28 Apr 2020
The price tried to break up the resistance but it failed.
It’s a bit concerning but we know that the Levels and Zones shows major levels so it might take some time to ultimately break them.
In the end, the general outlook is still bullish.
Trade update – 29 Apr 2020
Not only the price opened above the previous resistance (which is now a support), but a second support has emerged.
Both supports will now put an extremely high pressure to the upside and so, we should definitely win this ABCD Pattern trading.
For the sake of safety, and since the price is now above two supports, we moved the Stop Loss to Breakeven, so that we’re now in a Risk-Free trade.
Trade closed – 30 Apr 2020
The Price Action has ultimately reached our Trading Target and so the Trade was closed with a nice win.
In the end, this ABCD Pattern on Apple stock has been profitable, a 2.77x profit to be precise.
If you put some practice, recognizing similar Harmonic Patterns on your TradingView chart is very easy.
And if you then exploit the help of a few quality Trading Indicators, then it becomes a lot easier (and much more profitable!).
What do you think about the ABCD Pattern? Do you usually trade it or do you trade different Chart Patterns?
Let us know by leaving your comment on the YouTube video above.
