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Gartley's A B C Pattern

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Found an interesting auto ABC pattern finder for mt4 so thought to add some content about ABC patterns and how to find them. 

The ABC pattern was originally described by H M Gartley in his book “Profits in the Stock Market" 1935. He also developed the AB=CD harmonic pattern and these both use Fibonacci numbers and ratios to produce a Potential Completion Zone target area.


"Markets demonstrate repetitive patterns where prices oscillate between one set of price ratios and another making price projections possible. Market trends can be defined by geometric relationships as they exhibit harmonic relationships between the price and time swings. Many investors/traders use cycles and harmonic relationships to project future swing price/times. These harmonic price movements produce symmetric rallies and declines to give traders an advantage to determine the key turning points. Symmetry is visible in all markets and in all time frames."

"The key point in identifying an ABC and AB=CD patterns is to correctly detect the A, B and C key inflection (pivot) points in a chart while they are forming. These inflection points are determined by key swing highs and lows of various levels, and its correction waves to determine distinct swings. The potential C point is usually forecasted by the fibonacci retracements (0.38 to 0.618) of AB Swing. Once A, B and C points (and AB, BC legs) are identified, a projection algorithm is applied to compute the Potential Completion Zone (PCZ). This PCZ area is where ABC pattern is expected to complete and may signal continuation of its trend in the first trend direction (AB). Following the completion of BC leg, the projections of AB and BC legs (using Fibonacci ratios) are plotted (from C) to generate targets. The ABC pattern is traded in the trend direction of AB from C to D."

The top pic is the Dow M15 chart with the auto ABC indicator which uses the horizontal level at B to give an entry as price passes through.

The lower pics are of a method using 2 candles after the turn at C as the entry and a slop loss behind C and multiple Fib targets based on AB length.




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