Harmonic and chart patterns
AB=CD pattern
A move, a pullback and a second move of about the same size: the simplest harmonic pattern.
The idea in plain words
Markets often move in steps of similar length. If A-B was a 100-pip move and B-C a pullback, C-D is often about 100 pips too.
How it is calculated
Click A, B, C and D. The tool shows BC as a ratio of AB, CD as a ratio of BC and CD as a percentage of AB. After C it draws where D is likely (CD = 100%, 127.2% or 161.8% of AB); after D it draws the targets (38.2% and 61.8% of CD back from D) and a stop beyond the next extension of AB.
BC usually 0.618–0.786 of AB
CD ≈ AB (100%), often 1.272–1.618 of BCHow to use it
- Project D to find a potential end of the move and plan exits or reversals there.
Drawing conclusions
- CD much longer than AB shows a strengthening trend.
Example
AB rises 80 points, BC retraces 50 points (0.625), so D is expected about 80 points above C.
Prices in examples are illustrative.
Watch out for
- Like all patterns, use it with other evidence.
A little history
Described in H. M. Gartley's work and popularised by Larry Pesavento and Scott Carney.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.