The AB=CD pattern is a harmonic pattern in technical analysis that helps traders identify potential reversal points in the market. It consists of four price points, forming specific geometric shapes. The pattern is characterized by two equivalent price legs (AB and CD) separated by two other legs (BC and CD), where the CD leg retraces a specific Fibonacci ratio of the AB leg.
A bullish AB=CD pattern typically forms during a downtrend and signals a potential reversal to the upside. Traders look for specific Fibonacci ratios between the legs to confirm the validity of the pattern. Once identified, traders might use this pattern to enter long positions, anticipating a bullish move in the price.
As always with technical analysis, it's essential to combine pattern recognition with other indicators and analysis techniques for confirmation and risk management.
A bullish AB=CD pattern typically forms during a downtrend and signals a potential reversal to the upside. Traders look for specific Fibonacci ratios between the legs to confirm the validity of the pattern. Once identified, traders might use this pattern to enter long positions, anticipating a bullish move in the price.
As always with technical analysis, it's essential to combine pattern recognition with other indicators and analysis techniques for confirmation and risk management.