Home About Blog Books Contact Donate FAQ Glossary Privacy/Disclaimer Site Map Visual Index What’s New Subscribe to RSS feeds Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral. Kindle Paperback Nook Kindle Paperback Nook

# Bulkowski's Simple ABC Correction

 BustedPatterns Candles ChartPatterns EventPatterns Small Patterns
 Market Industrials (^DJI): Transports (^DJT): Utilities (^DJU): Nasdaq (^IXIC): S&P500 (^GSPC): As of 10/22/2018 25,317 -126.93 -0.5% 10,436 -3.05 0.0% 742 -4.28 -0.6% 7,469 19.60 0.3% 2,756 -11.90 -0.4% YTD 2.4% -1.7% 2.6% 8.2% 3.1% Tom's Targets    Overview: 10/11/2018 26,000 or 24,600 by 11/01/2018 10,200 or 11,100 by 11/01/2018 755 or 715 by 11/01/2018 7,700 or 7,200 by 11/01/2018 2,850 or 2,700 by 11/01/2018 CPICPI: on 9/24/18

The simple ABC correction is a measured move down chart pattern nested inside a measured move up. If measured moves are unfamiliar, then click the associated link for more information. My book, Encyclopedia of Chart Patterns Second Edition, pictured on the left, has a complete discussion of measured moves.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

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## Simple ABC Correction Identification Guidelines

 Characteristic Discussion Nested The simple ABC correction is a measured move down chart pattern nested inside a measured move up. Chart See the above chart. Point D must be below point C, meaning that the measured move down (MMD: EABC) must not correct too far. MMDs that correct too far fail more often. Corrective phase The corrective phase of the large MMU is an MMD, like the ABC pattern shown in the above chart. Only one MMD should be present with two straight-line runs, EA and BC. Discard patterns with pronounced turning points within those two down legs. Points Within the MMD, points A, B, and C are below E. Be especially careful that B not be above E. Point C starts a major price up swing.

## Simple ABC Correction Trading Tips

Reference the figure on the right.

 Trading Tactic Explanation Trendline Draw a trendline from E to B and extend it downward. When price closes above the trendline, buy. Swingers For aggressive traders, draw a trendline down from B along the tops and buy when price closes above it. A close above the intraday high at A (blue trendline) also works as a buy signal. Buy For conservative investors, a close above B or even E is the buy signal. Reverse Be prepared for price to reverse at the price of E – 36% do and prices drop, confirming a double top.

## Simple ABC Correction Example

The above figure shows an example of a simple ABC correction chart pattern. Point A begins the chart pattern, B is the middle turning point, and C completes the pattern. Another simple ABC correction occurs at points 1, 2 and 3.

-- Thomas Bulkowski