As of 02/21/2024
  Indus: 38,612 +48.44 +0.1%  
  Trans: 15,582 +118.68 +0.8%  
  Utils: 854 +11.76 +1.4%  
  Nasdaq: 15,581 -49.91 -0.3%  
  S&P 500: 4,982 +6.29 +0.1%  
YTD
 +2.4%  
-2.0%  
-3.1%  
 +3.8%  
 +4.4%  
  Targets    Overview: 02/13/2024  
  Down arrow37,700 or 39,000 by 03/15/2024
  Up arrow16,400 or 15,400 by 03/01/2024
  Up arrow870 or 800 by 03/01/2024
  Down arrow15,000 or 16,400 by 03/15/2024
  Down arrow4,850 or 5,100 by 03/15/2024
As of 02/21/2024
  Indus: 38,612 +48.44 +0.1%  
  Trans: 15,582 +118.68 +0.8%  
  Utils: 854 +11.76 +1.4%  
  Nasdaq: 15,581 -49.91 -0.3%  
  S&P 500: 4,982 +6.29 +0.1%  
YTD
 +2.4%  
-2.0%  
-3.1%  
 +3.8%  
 +4.4%  
  Targets    Overview: 02/13/2024  
  Down arrow37,700 or 39,000 by 03/15/2024
  Up arrow16,400 or 15,400 by 03/01/2024
  Up arrow870 or 800 by 03/01/2024
  Down arrow15,000 or 16,400 by 03/15/2024
  Down arrow4,850 or 5,100 by 03/15/2024

Bulkowski on the Simple ABC Correction

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 PatternsEncyclopedia of Chart Patterns 2nd Edition book., 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.

-- Tom Bulkowski

$ $ $

Shows a Simple ABC correction

A Simple ABC Correction

Simple ABC Correction: Identification Guidelines

CharacteristicDiscussion
NestedThe simple ABC correction is a measured move down chart pattern nested inside a measured move up.
ChartSee 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 phaseThe 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.
PointsWithin 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.
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Simple ABC Correction: Trading Tips

Reference the figure on the right.

Trading TacticExplanation Shows a Simple ABC correction
TrendlineDraw a trendline from E to B and extend it downward. When price closes above the trendline, buy.
SwingersFor 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.
BuyFor conservative investors, a close above B or even E is the buy signal.
ReverseBe prepared for price to reverse at the price of E -- 36% do and prices drop, confirming a double top.

 

Simple ABC Correction: Example

Simple ABC correction chart pattern 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

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notice for paid links: "As an Amazon Associate I earn from qualifying purchases."

My novels:  Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of Chart Patterns 3rd Edition book

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