The pattern is easily one of the wonkiest looking patterns. Depending on the amount of knowledge you have about , the will look different, and this is mainly because the pattern begins a 0. If you are familiar with seeing XABCD, then 0XABCD will undoubtedly look different.
The patterns are relatively new but are getting more popular lately. It stands out from the other because it is meant to begin a new trend rather than discover retracement. There are two types of this pattern, and .
The convergence zones discovered with the help of the pattern makes it possible for us to accurately detect the rebound but doesn’t necessarily lead to the restoration of the previous trend. On the other hand, regular rollbacks aim to determine the ability of the forces dominant on the market in the previous period (bears or bulls) to get the initiative back to their disposal. If they are not sufficient, the last reversal of the previous trend occurs, but already within another pattern – .
How to identify the pattern?
If the conditions are satisfied, we can trade the last leg of CD. They entering at C with a stop below 2.24 of AB retracement and aiming at 50 percent correction of BC movement.
The is traded when the price is getting to point D. The stop-loss is positioned a few points below/above the farthest possible D level. Unlike a lot of the other patterns, doesn’t have specific targets because it usually begins a new trend. Here the pattern fib ratios don’t matter much. Entries might be done with a limit order or on price reversals away from point D. All entries have to be confirmed for risk/reward ratio. Entries having less risk/reward have to be taken cautiously or discarded altogether.
In our example, current stock AUBANK has shown a classic 0xabcd pattern or in other words . It is a pattern where most of the XABCD pattern swing traders would have forced either to become a long term investor or book a loss who have not booked at
.50 retracement as everything has happened too fast to react on.
As technology is developing everyday , so as the traps are becoming too much knotty to decode and survive as a swing trader, for a swing trader”s job is to find swings every time and dive with the trend and this type of complex patterns ends up his/her dream as a bad bad nightmare.
So, this effort by me is especially for the swing traders who are welcomed to enlighten more on this topic and to go updated as this pattern is said to be new.
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