What's the ABCD trend chart pattern?
Our definition is when A, B and C are swing points and D reaches a given ratio of AB:CD.
The ratio of AB:CD is determined by comparing the price difference between C to D and A to B.
Here is the formula to calculate it: |Price of C - Price of D| / |Price of A - Price of B|.
I categorized four types of ABCD trend chart pattern.
In order to be more efficient, I created two indicators for the ABCD trend chart pattern, one for downtrend which is used to detect pattern type 1 and 2, one for uptrend which is used to detect pattern type 3 and 4.
How it works?
The point A, B and C are swing points, once these three points are formed and if the current bar was qualified to be point D the indicator will send a sound alert and highlight the pattern on the chart. It will also plot six support and resistance levels, the default levels are based on golden ratio, you can change the ratios from input.
You will be able to control the shape of the pattern in order to detect your desired ones only.
If you want AB=CD, then just set the ABCD ratio input to 1.
You can also use different value for ABCD ratio input, such as 1.2 which means |Price of C - Price of D| / |Price of A - Price of B|≈1.2, or using 0.618 for ABCD ratio which means |Price of C - Price of D| / |Price of A - Price of B| ≈ 0.618.
In the equation above, I used the symbol of approximately equal (≈) because the exact ratio value only exists in theory. We can hardly find any match without a threshold. The ratio value will be calculated with a very small threshold in order to get more results.
Please note that this indicator is not intended for trend prediction, it will not inform you the direction of the price.
ABCD ratio, this parameter is used to adjust the ratio of AB:CD.
Strength, this parameter is used to define the minimum number of bars to the left and right side of the swing point. For more details of this input please check: https://goo.gl/sWBH7k
AB percent, this parameter is used to check the price difference between A and B in percentage. For example, if you set it to 5, then point B must fall/raise at least 5% from point A.
No repaint if the pattern was drawn after the point D closed.
Sound alert when pattern is detected with switch.
Choose different color to highlight the price bars which formed the pattern.
Choose a different color for the line that linked AC and BD, and the A, B, C, D char color.
Copyright @ 2021 Patternsmart - All rights reserved
This website is for educational and informational purposes only and should not be considered a solicitation to buy or sell a futures contract or make any other type of investment decision. It's not recommended to use any single indicator as sole evaluation criteria. The companies and services listed on this website are not to be considered a recommendation and it is the reader's responsibility to evaluate any product, service, or company. patternsmart is not responsible for the accuracy or content of any product, service or company linked to on this website.
Futures trading contains substantial risk and is not for every investor.Please read the following risk disclosure before considering the trading of this product: Futures Risk Disclosure. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Trading stocks, options, futures and forex involves speculation, and the risk of loss can be substantial.Investor must consider all relevant risk factors, including their own personal financial situation, before trading. Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors. Forex investments are subject to counter-party risk, as there is no central clearing organization for these transactions. Please read the following risk disclosure before considering the trading of this product: Forex Risk Disclosure. Spreads, Straddles, and other multiple-leg option strategies can entail substantial transaction costs, including multiple commissions, which may impact any potential return. Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Prior to trading options, you should carefully read Characteristics and Risks of Standardized Options.
patternsmart.com will not be held liable for the loss of money or any damage caused from relying on the information on this site. Any investment decision you make in your self-directed account is solely your responsibility.