As of 05/20/2022
Indus: 31,262 +8.77 +0.0%
Trans: 13,491 +51.76 +0.4%
Utils: 991 +1.46 +0.1%
Nasdaq: 11,355 -33.88 -0.3%
S&P 500: 3,901 +0.57 +0.0%
|
YTD
-14.0%
-18.1%
+1.0%
-27.4%
-18.1%
|
|
As of 05/20/2022
Indus: 31,262 +8.77 +0.0%
Trans: 13,491 +51.76 +0.4%
Utils: 991 +1.46 +0.1%
Nasdaq: 11,355 -33.88 -0.3%
S&P 500: 3,901 +0.57 +0.0%
|
YTD
-14.0%
-18.1%
+1.0%
-27.4%
-18.1%
| |
| ||
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,
pictured on the left, has a complete discussion of measured moves.
If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.
$ $ $
A Simple ABC Correction
|
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. |
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. |
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
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Amazon.com If you buy ANYTHING while there, they pay for the referral.
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