Forex glossary
ABCD Pattern
The ABCD pattern consists of an AB move, a BC retracement and a CD move. In the basic AB=CD version, the directional legs have similar lengths; Fibonacci ratios help locate D. This identifies a candidate reaction zone rather than guaranteeing a reversal.
Illustrative example
How does it work in practice?
Assume AB falls from 110 to 100, C retraces to 106.18, and CD falls by the same ten units. D is 96.18; equal legs describe the hypothetical structure without establishing a subsequent rally.
A case to work through
Projecting from C
Hypothetically, A=120, B=100 and C=112; CD is the downward leg.
- AB spans 20, so an equal CD would end at 92.
- BC retraces 12/20=60% of AB; assess that ratio separately.
What follows? Record 92 as the geometric candidate and check the remaining criteria.
Example boundary: Equal lengths do not establish a future price reaction.
A useful distinction
ABCD Pattern / Harmonic Pattern
ABCD has four points; the broader harmonic family also includes XABCD structures with additional ratios.
Check your understanding
Project CD from the correct starting point.
Show the answer and explanation
76
AB spans 10, which is subtracted from C=86.
Anchors, ratios and rules
Step 4 / 10 · 0 / 10 reviewed
View the full sequence →Progress is saved only in this browser.
Read the fuller explanation
Related terms
Sources and documentation
- Harmonic Trader – AB=CD
Equal AB/CD projection and the author's BC retracement criteria.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.