I have observed in previous recent swings that the market has had a tendency (key word) to want to move harmonically... before lumbering back into consolidation. Everyone is still waiting for some sort of announcement from Gox so I don't expect much, but I am watching to see if this AB=CD Pattern completes for a buy entry at around $612.
Initially I was just playing with the trend-based fib extension tool looking for where 1.27 of the AB impuls leg would land for a potential reversal zone- then noticed that it was not only a *nearly* perfect ABCD, but also completes at major previous structure support (Look at the higher time frames). This was enough for me to set my entry... target #1 at $619 (B point), target #2 just shy of .618 at about $628.
Here are the requirements for a "perfect" AB=CD pattern:
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- An ideal AB=CD, the C point retraces to either 0.618 or 0.786 of AB. A is a significant high, and B is a significant low. There can be no highs above A and no lows below B.
- This retracement sets up the BC projection which should converge at the completion of the AB=CD and be either a 1.27 or 1.618. Note: a .618 retracement at C will result in a 1.618 BC projection. A .786 retracement at C will result in a 1.27 projection.
- The most important thing to remember is that the BC projection should converge closely with the completion of the AB=CD.
Initially I was just playing with the trend-based fib extension tool looking for where 1.27 of the AB impuls leg would land for a potential reversal zone- then noticed that it was not only a *nearly* perfect ABCD, but also completes at major previous structure support (Look at the higher time frames). This was enough for me to set my entry... target #1 at $619 (B point), target #2 just shy of .618 at about $628.
Here are the requirements for a "perfect" AB=CD pattern:
----------------------------------------------------------------------------------
- An ideal AB=CD, the C point retraces to either 0.618 or 0.786 of AB. A is a significant high, and B is a significant low. There can be no highs above A and no lows below B.
- This retracement sets up the BC projection which should converge at the completion of the AB=CD and be either a 1.27 or 1.618. Note: a .618 retracement at C will result in a 1.618 BC projection. A .786 retracement at C will result in a 1.27 projection.
- The most important thing to remember is that the BC projection should converge closely with the completion of the AB=CD.