SUMMARY: The AB=CD pattern is one of the most classic chart patterns which repeats over and over again. The AB=CD pattern shows perfect price harmony and is also referred to as ‘Measured Move’.
These points define three consecutive price swings, or trends, which make up each of the three pattern “legs.” These are referred to as the AB leg, the BC leg, and the CD leg.
The AB=CD pattern developed by Scott Carney and Larry Pesavento after being originally discovered by H.M Gartley.
AB=CD pattern: The AB distance is equal to the CD distance. The BC leg retracement should be measured at less than or equal to 62% of the distance between A and B.
Once the BC leg manifests itself, the AB leg should be divided into 4 equal parts (25%) to define profit targets between C and D. Order entry should be at C, with a StopLoss placed below C (according to good risk management rules).
Four profit targets:
- C + (25% of AB)
- C + (50% of AB)
- C + (75% of AB)
Bearish AB=CD pattern sample.
Source of reference:
The references below are not investment recommendations, but rather sources for you to check (ie. get to know what is out there)
- Measured Moves by Ken W. Chow (https://www.youtube.com/watch?v=xumG41-0-SE)
- Harmonic Trading AB=CD by Warren Peacok (https://youtu.be/YytJUJ0QXSY)
- Introduction to Harmonic Patterns by Alpha Play Forex Trading School (https://youtu.be/wKk60WcBVak)
- Planetary Harmonics of Speculative Markets (by Larry Pesavento)
- Harmonic Trading from the Natural Order of the Financial Markets (by Scott M. Carney)
This blog is a summary of “The Measured Move” presentation made by Arthur Marcus