To spot this chart pattern, all you need are ultra-sharp hawk eyes and the handy-dandy Fibonacci chart tool.

Make Money With The Fibonacci ABC 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. If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach until the 0.

ABCD Pattern | dicajytuh.web.fc2.com

Next, the line CD should be the 1. All you have to do is wait for the entire pattern to complete reach point D before taking any short or long positions.

Oh, but if you want to be extra strict about it, here are a couple more rules for a valid ABCD pattern:. The three-drive pattern is a lot like the ABCD pattern except that it has three legs now known as drives and two corrections or retracements.

In fact, this three-drive pattern is the ancestor of the Elliott Wave pattern. As you can see from the charts above, point A should be the Similarly, point B should be the 0. Then, drive 2 should be the 1. Typically, when the price reaches point B, you can already set your short or long orders at the 1.

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