back start next
[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [ 36 ] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [69] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90] [91] [92] [93] [94] [95]
36 when it was selling off. I found myself frequently "fighting" the pattem. I would calculate the completion point of the AB=CD pattem, prepare my trade and not execute at my predetermined price. Before I employed this pattem in my trading, I waited for a stock to confirm the reversal. I would wait for some type of oscillator or volume indicator to substantiate the price action. This confirmation usually delayed my executions and often did not prove useful at all. Bullish AB=CD Stop Loss The stop loss in this pattern is somewhat subjective. Generally, the stop loss should be a point or two below the exact completion of the pattem.  BULUSH AB = CD STOP LOSS BELOW POINT D! If a reversal is going to occur, the price action usually will tum bullish in this area. So, it is important to study this area closely to determine the validity of the trade. Once the stock hits the area where the pattem completes, the price action "should" begin to rally. Ifthe stock does not tum around, there are some signs to be aware of that will invalidate the set-up. If the stock closes below the completion point or continues to decline after hitting the area, it
would signal that the reversal probably will not occur. Hence, the stop loss should be executed. Ideal Bullish AB=CD The ideal bullish AB=CD pattem will have two distinct declining price legs. The pattern begins at point A with a sell-off to point B. After a retracement to either the .618 or .786 of the AB leg, the CD leg begins. The sell-off ofthe CD leg should complete at either the 1.27 or the 1.618 projection ofthe leg. Lets look at the illustration.  bullish ab= cd buy at point d! The completion of this pattem should have two harmonic calculations converging in a specific area. The most important number is the point where the CD leg equals the AB leg. I consider the completion of an exact AB=CD a minimum requirement before entering a trade. Sometimes a stock will reverse just shy - less than a point - of the exact completion point. In these situations, I wait for a clear reversal sign in the price action before executing a trade. The projection, either 1.27 or 1.618, should converge
very close to the completion point at D to complement the potential reversal zone. Although the AB=CD is usually distinct, the Fibonacci calculations can be very effective in determining the completion of the pattem. As a rule of thumb, I examine the retracement of the AB leg to determine the leg projection. Specifically, ifthe leg retraces to the .618 of AB, the completion ofthe pattem should occur at the 1.618. If the leg retraces to the .786 of AB, the pattem will complete near the 1.27 projection. Without getting into a dissertation on Geometry, it is important to be aware ofthese relationships. This pattem occurs very frequently. Often, the ideal pattem will bounce almost exactly off the harmonic numbers and provide a set-up that almost seems too good to be tme. Although the pattem can seem too simple at times, it accurately indicates areas that yield significant reversals. Lets look at some examples. The first example of Costco is a near perfect AB=CD pattem. The stock formed two distinct price legs and reversed almost exactly off the completion point of the pattern.  costco (cost): daily bullish ab=cd CBIgChartiwiioiB lUlill lllllllllllllll.lllt.ll flyg Ssp S6 84 82 SO 78 76 74 72 70 68 66 64 3 6 4 2 Cr 4209
[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [ 36 ] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [69] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90] [91] [92] [93] [94] [95]
|
Menu
