What is AB=CD pattern?

AB=CD is a form of the basic harmonic pattern ABCD. The pattern consists of three price swings. The lines AB and CD have exactly the same length, which results in the same angle. This ABCD pattern type is often seen and is popular among traders.

How to trade AB=CD pattern?

You only need ultra-sharp hawk eyes and the handy-dandy Fibonacci chart tool to spot this chart pattern. For both the bullish and bearish versions of the ABCD chart pattern, the lines AB and CD are known as the legs, while BC is called the correction or retracement.

Using the Fibonacci retracement tool on leg AB, the retracement BC should reach the 0.618 level. Next, the line CD should be the 1.272 Fibonacci extension of BC. After reaching the D level, you can expect a reversal toward the 38.2% retracement of AD. This is going to be our first take profit.