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XABCD 5-point chart patterns are very common and popular in technical analysis, some of them have already been named, such as Gartley, Butterfly, Bat, Crab, Shark and Cypher.
As the name suggests, XABCD pattern has 5 points and 4 legs formed by those 5 points. The concept of XABCD 5-point pattern is to compare the retracement level between legs. For example, when you see AB makes a 0.382 or 38.2% Fibonacci retracement of the X-A leg or XA, it means that the price difference from point A to B is equal to 38.2% of the price difference from point X to A.
If we use a formula to represent the relation, it will be: (B-A)=0.382*(X-A);
This indicator is able to detect and highlight any Bullish M shape XABCD 5-point chart pattern based on your pre-defined settings, and plots the Fibonacci retracement automatically.
The following video shows how it plots in real-time.
How it works:
It uses Zigzag to track the price trend and detect all four legs based on your settings. If there are four adjacent legs that meet the retracement levels you set, it will highlight the XABCD 5 points, plot two triangles and draw the Fibonacci retracemen lines. The image below is an example of what this indicator plots on the chart.
There are two Zigzag deviation type: percentage and point. The parameter "deviation value" is the actual number used for deviation type.
When you use percentage as the deviation type, it means that the value difference between two adjacent Zigzag point must be greater than the input percentage which is the deviation value. For example, if you used percentage deviation type and set the deviation value to 0.1, the value difference between X and A must greater than 0.1%. It also applies to all adjacent Zigzag points such as: A and B, B and C, C and D.
When you use point as the deviation type, it means that the value difference between two adjacent Zigzag point must be greater than the input point which is the deviation value. The value of Point is the actual price amount, if you set the deviation value to 1 the value difference between X and A must greater than $1. It also applies to all adjacent Zigzag points such as: A and B, B and C, C and D.
For example, if you used a percentage deviation type and set the deviation value to 0.1, the value difference between X and A must greater than $0.1.
Please make sure you set the proper input for zigzag, otherwise you may not be able to detect the desired patterns.
You may need to use a relatively small deviation value for Forex.
The retracement levels in some XABCD patterns definition are theoretical values, it's not realistic to set the retracement as a fixed value such as 0.618, since you may not be able to find any pattern in a short time.
It's better to set the value as a range. For example, if you want to detect 0.618 retracement from AB to XA, then set a range from 0.6 to 0.64 will be more practical.
Set the inputs as: ratio AB:XA <=0.6 and ratio AB:XA >=0.64.
Define the retracement between legs as shown in the picture below.
Show XABCD patterns on history data, if turn this feature OFF, it will only plot the latest XABCD pattern.
Otherwise, it will keep all qualified patterns on the chart.
But only the last one will show Fibonacci retracement levels.
The following chart is a pattern on history data.It will not plot retracement levels on historical patterns.
The following chart is an example of how projection mode works.
It will draw the point D once point C is formed, the shade color is orange instead of light blue.
The following chart is an example of how customized XABCD ratio works.
You can set the ratios to any value you want.
I set the ratios of AB:XA and CD:BC to a range around 1, then the shape will be an M top or double top pattern as shown in below.
Please make sure you have enough bars loaded on the chart.
You can also use this indicator to capture any XABCD pattern as well as the ones that already been named.
The following example shows how to use this indicator to detect Cypher Pattern.
Cypher Pattern Rules:
The image below is the parameters for bullish Cypher Pattern, since it uses BC:XA and CD:XC, you need to enable those settings.
The following example shows how to use this indicator to detect bullish Gartley pattern.
Gartley pattern rules:
The following example shows how to use this indicator to detect bullish Butterfly pattern.
Butterfly pattern rules:
Since the legs are based on Zigzag line, please make sure you set the proper input for zigzag first, otherwise you may not be able to detect the desired patterns.
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