Bullish and Bearish ABCD Harmonic pattern

Friday, October 28, 2011
The ABCD chart pattern is also nicknamed "Lightning Bolt".
The key to the ABCD Harmonic chart pattern is price symmetry where AB segment is equal to CD segment.


Bullish ABCD  
   AB = CD
  • Bullish reversal harmonic chart pattern
  • Each point (ABCD) represents a significant high or low
  • 3 consecutive price swings forming a geometric pattern
  • AB and CD segments are called "legs" and BC segment is called a retracement
  • AB and CD segments are of equal lenght
  • AB segment is equal in time to CD segment
  • Point C is .618 / 786 Fibonacci retracement of AB segment
  • Point C is lower than point A
  • Point D is .127 / 1.618 Fibonacci extension of BC segment
  • Point D is lower than point B
  • Buy signal at point D

Bearish  ABCD  
   AB = CD
  • Bearish reversal harmonic chart pattern
  • Each point (ABCD) represents a significant high or low
  • 3 consecutive price swings forming a geometric pattern
  • AB and CD segments are called "legs" and BC segment is called a retracement
  • AB and CD segments are of equal lenght
  • AB segment is equal in time to CD segment
  • Point C is .618 / 786 Fibonacci retracement of AB segment
  • Point C is higher than point A
  • Point D is .127 / 1.618 Fibonacci extension of BC segment
  • Point D is higher than point B
  • Sell signal at point D