THE ABCD Question

[elephant]

Hey Guys,

I have been practicing with "The ABCD's" and it seems to work when you have the right parameters. HOWEVER, I am confused as to when to take profit. Any clues?

Elephant

[Joepippin]

Once abc is complete pull fib from low of A to high of C. Look for 38 50 61.8 70 79 for tp's.. add a known sr level in conjunction with those levels and youll have a higher probability of that level being hit.

[elephant]

Once abc is complete pull fib from low of A to high of C. Look for 38 50 61.8 70 79 for tp's.. add a known sr level in conjunction with those levels and youll have a higher probability of that level being hit.

What SR lines are you using? Should it be from the previous day? Or can it be the High/Low of the same day the trade is being place?

Sorry for the late reply!

[DRA]

Fibs MUST be pulled from A-B not A-C. You enter at the projected C.
You can use risk-reward ratio to take profit or exit above or below B depending on the direction of the trade.

[elephant]

Fibs MUST be pulled from A-B not A-C. You enter at the projected C.
You can use risk-reward ratio to take profit or exit above or below B depending on the direction of the trade.

Why not enter the market at prices above point D? Is it because the fear of another retracement? I dont quite understand what you mean to take profit/exit above or below B. If i entered at point C, I am already above/below B. In the graph above, C is above point B. If i enter at projected C from the bullish market (after point D), point B is waaaaayy below my price line-meaning I am taking a loss. Can you clarify what I am not understanding?

[DRA]

On the chart shown the trade direction would be short seeing that the market is making lower lows and lower highs. A-B is the extension from the previous a,b,c,d. As soon the retracement starts from the lower low at B you would spread the fibs and look for a potential "C" to enter. "C" can be either a fib level or you can use reversal candlestick formations to enter. If you entered short at "C" then the projection is D which in this case would be below B. SO you can use risk-reward ratio to exit or you can select a level B to exit.

[DRA]

C-D is now a new A-B as shown in blue. Now you would be looking to go short on the retrace to a potential C with D extension below B. This one breaks the resistance above A so you would be stopped out.

[elephant]

On the chart shown the trade direction would be short seeing that the market is making lower lows and lower highs. A-B is the extension from the previous a,b,c,d.

what if there is no previous ABCD formation prior to the one we found? What if the prior had a formation of a .382 (AC)+ 161.8 (BD)?

As soon the retracement starts from the lower low at B you would spread the fibs and look for a potential "C" to enter. "C" can be either a fib level or you can use reversal candlestick formations to enter. If you entered short at "C" then the projection is D which in this case would be below B. SO you can use risk-reward ratio to exit or you can select a level B to exit.

It seems like you are trying enter the trade to aim for a complete ABCD while the CD line is still yet to complete. Isn't the point for this ABCD pattern to first be completed and then at point D we decide whether it goes down or up depending on the type of ABCD formation?

OR

Are you trying to say, with the potential ABCD formation, where the market will change after point D, treat the CD leg as if it were another seperate AB leg?

[DRA]

what if there is no previous ABCD formation prior to the one we found? What if the prior had a formation of a .382 (AC)+ 161.8 (BD)?

Theres always a previous ABCD pattern on any chart, thats how the market moves. It doesnt matter what fib level the retracement stops. All the levels can be traded.

It seems like you are trying enter the trade to aim for a complete ABCD while the CD line is still yet to complete. Isn't the point for this ABCD pattern to first be completed and then at point D we decide whether it goes down or up depending on the type of ABCD formation?

Thats how the pattern is traded at C with the flow of the market. However D can be traded in the opposite direction but its a lot more risky than entering at C.

OR

Are you trying to say, with the potential ABCD formation, where the market will change after point D, treat the CD leg as if it were another seperate AB leg?

Yes once the D extension is established it automatically becomes the next A-B.

[elephant]

Theres always a previous ABCD pattern on any chart, thats how the market moves. It doesnt matter what fib level the retracement stops. All the levels can be traded.


Thats how the pattern is traded at C with the flow of the market. However D can be traded in the opposite direction but its a lot more risky than entering at C.

Yes once the D extension is established it automatically becomes the next A-B.

Where did you learn thsi method of trading? I am curious because I would like to know mooooarrr.