Learn FOREX: Harmonic AB=CD as a continuation pattern

Learn FOREX: Harmonic AB=CD as a continuation pattern

In conjunction with different techniques of analysis the harmonic AB=CD patterns can play a magnificent role to define the areas where the trend will continue as we will discuss in the following paragraphs.

Actually, AB=CD is one of the simplest formations that can define continuation areas inside channels  as we will see although complex patterns provide more efficient PRZ or rather potential reversal zones from where the trend will continue.

The first educational figure explains how the bullish AB=CD pattern acts as an accurate continuation pattern inside established trend channels; particularly, when its PRZ meets the lower line of the channel which is also known as a support line or rising trend line.

abcdbullishchannel

The buying opportunity in the case above could be activated when we get another technical signal such as observing an overbought signal on momentum indicator.

Example from the market

market-b-abcd


The following figure explains the bearish harmonic AB=CD continuation pattern when it is formed within a descending channel.

bearishabcd-channel

In the image, we can see how the D levels -potential reversal zones- act areas of downside rally resumption when the price meets Fibonacci projection level while touching the resistance line of the descending channel.

Example from the market

2-ABCD

Amir El Araby

Co-Founder & Chief Global Strategist at FxComment.com, with 17 years’ experience in the technical analysis studies for FOREX, Commodities and Indices. Amir El-Araby worked as a mentor for many companies and institutes, where he presented new methods for trading in the financial market. Amir is a member of ESTA (Egyptian Society of Technical Analysts). Amir is also the official partner of Harmonic Trader (Mr Scott Carney) and the official instructor of harmonic trader association for Arab countries.

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