Stochastic, MACD, Bollinger Bands Plus Day And Swing Traders

ABCD Pattern Extensions webpage is a webpage that teaches day or swing traders

and investors how to thoroughly master and trade like a pro the various

types of the ABCD chart patterns extensions.  In the end of this trading

material, one will know when and where ABCD chart pattern extensions

occur and most importantly trade them like a pro.

Be ready to master the ABCD pattern extensions now.

ABCD chart pattern extensions occur now that the price structure CD is

strictly superior to AB. The existing phenomenon characterises bullish dynamic

financials instruments in a strong market environment.

Although, core investors establish their initial exit price target at the point D

(where there is equality between CD and AB), the market sentiment becomes

greatly bullish as both the fundamentals and technical indicators align. The

same is likewise true for an expansive bearish ABCD as financials continue

to degenerate.

In regular conditions, financial markets are directional (imbalanced) throughout

an abcd extension. Certainly, either bulls or bears drive the momentum.

Generally, bullish traders stay away during an extended bearish CD while

bearish dealers do not interfere with an extended bullish ABCD.

Extended ABCD chart pattern

Key points

1/ the retracement or pullback to C

is an occasion to buy as the financial instrument reveals a higher

low after an initial bullish wave.

Point C becomes a bullish trading zone (or gathering point)

to traders who responded.

2/ the rally (contra trend) or retracement

to C during a bearish ABCD is justly an enticement to sell after the prior bearish

impulsive progress.

3/ apart from the financials and market

sentiment that contribute to the extension, keen Fibonacci traders habitually set

their exit price targets at 214%, 238%, 261.80% and 314% Fibonacci extensions.

View chart

Image = Apple Inc stock (AAPL) on the monthly chart exhibiting

an ABCD pattern extension.

The green spot on the chart is the point A (mid 2004).

The red spot on the chart is the point B (start of 2008).

The blue spot on the chart is the point C (start of 2009). 

The turquoise spot on the chart is the point D (end of September 2012).

Notice that the price action AB (green line) is strictly shorter than CD (orange line). 

This is an ABCD pattern extension because AB is shorter than CD (there is

no equality between AB and CD price actions).  

Author = George Beaulieu,

founder of stochastic-macd, 24elliottwaves and dayprotraders websites. 

In reality, bullish traders in an extended bullish ABCD saturate the market.

The contrast is additionally valid in a bearish trend.

4/ the point D (delta) is a convergent point where solid convergent day or swing

trading signals take place. At the completion of a bullish ABCD, bullish traders sell

together with bearish traders whom do not attempt to challenge the bulls during

the extended CD.  Indeed, bears recognize that there is no more demand to buy.

Therefore, they join bullish traders who are selling to close their bullish positions.

The inverse occurs at the end of a non-bullish ABCD where convergent signals

often appear.

5/ Expert day or swing traders regularly search for the best trading setups around

the point C of the ABCD chart patterns.

6/ Though most day or swing traders prefer to enter their trade at point C, one can

also enter a day or swing trade in the zone of B.



ABCD chart pattern trade entry in the zone of point B

The price must burst above B and retest it before resuming the ascend. In this

instance, a bullish trade setup is only active (or properly cooked) after the

validation of B as a firm support.

View the chart

Image = Apple Inc stock (AAPL) on the monthly chart exhibiting

a retest of the support from the point B after a valid breakout (supported by

strong fundamentals and viable market environment).  In May 2010, the stock

pulled back on a low trading volume to retest the pink spot (support from

point B = blue line on the chart).  Generally, the best place to buy a stock

in an ABCD chart pattern is at point C.  However, one may also buy at

the retest of the support from the point B. 

of B as a strong resistance.

Warning

From those trading setups, one ought to apply a multiple time frames trading

strategy. Moreover, one will align trades with market patterns for each period.

Reversal ABCD chart pattern

The reversal ABCD chart pattern is a type of ABCD price structure where CD is

strictly inferior in length to the original AB price action. It is the opposite of the

extended ABCD chart pattern.

View this chart

Image = Western Digital Corp. (WDC) stock on the monthly chart exhibiting

a bearish reversal ABCD chart pattern.  Notice that the demand to buy

during CD price action (orange line on the chart) was not as strong as it

was during the AB price action (green line on the chart).  Consequently,

bearish investors joined the bulls that were taking profit at point D

(turquoise spot on the chart) and sold the stock under a high trading volume.

Indeed, the reversal ABCD chart pattern is often noticeable from the start

of the third Elliott wave (when the third Elliott wave is extended) to the end

of the fifth wave. 

On the other hand, one will also recognize an ABCD pattern extension from the 

start of the third Elliott wave (when the third Elliott wave is not extended) to the

end of the extended fifth wave.   ABCD chart pattern may also form during an

abc or zigzag pattern.  Finally, an ABCD may also combine two motive waves

with a corrective price action.  In this intance, the first motive wave is the AB

price action, BC will be the correction and CD is the second motive wave.

One should understand that there are many types of ABCD chart patterns. 

  Author = George Beaulieu,

founder of stochastic-macd, 24elliottwaves and dayprotraders websites. 

Bullish reversal ABCD chart pattern

Contrary to the extended ABCD bullish chart pattern, the Bullish momentum during

CD wave in the reversal pattern is not as strong as in the initial AB. The momentum

stalls before the asset price gets close to the equality point D (delta zone where AB = CD).

From a technical point of view if a bullish asset fails to replicate at least the magnitude

of the prior price action, it is bearish until it gains support at the prior high. The prior

high, in this case, is point A.

The inverse is also compelling in a downtrend.

Indeed, the reversal ABCD chart pattern is one of the characteristics of financial

instruments that turn bearish due to one of the following:

1/ unexpected economic news

2/ the company blunders analyst earnings

forecast

3/ financials are becoming negative

4/ market bullish cycle expires as the financial instrument is rising towards

the point of equality D.

5/ market bearish cycle expires as the financial instrument is declining towards

the point of equality D.

For more information about the ABCD chart pattern check out this

webpage http://www.stochastic-macd.com/abcdchartpattern.htm