Saturday, May 20, 2023 9:48:39 AM
ABC reversals and the double ABC move.
In this chart there are 2 ABC patterns that come off of the supply zone where there are sellers causing a resistance around 4226
First pattern: Basic concept is an ABC move and then point B gets retested and rejected. I use a sell stop limit order 2 ticks below the rejection candle noted by the red arrow. I use 3 contracts, first is a minimum 2 pt scalp, after that target is hit the 2 runners get a stop loss adjusted to the orange break even price. Then the fib extensions give us a T1 and T2.
It's rare for this to be a total reversal in the case of a strong sell zone.. I would typically look for a minimum of 3 tests of the sell zone before I start to look for a bigger move down. In the next chart there ended up being a total of 5 retests of the sell zone. FOMO would have you think that price is going to break out to the upside and you will miss out on it, but price needs to confirm that first with a break out and then a retest of that level, which never happened.
The second ABC reversal had a period of whip saw action that took out stops like crazy, this is key to trying to spot and avoid at all costs.
Targets would be at the next area of support which were down past the 1.618 fib extension.
In this chart there are 2 ABC patterns that come off of the supply zone where there are sellers causing a resistance around 4226
First pattern: Basic concept is an ABC move and then point B gets retested and rejected. I use a sell stop limit order 2 ticks below the rejection candle noted by the red arrow. I use 3 contracts, first is a minimum 2 pt scalp, after that target is hit the 2 runners get a stop loss adjusted to the orange break even price. Then the fib extensions give us a T1 and T2.
It's rare for this to be a total reversal in the case of a strong sell zone.. I would typically look for a minimum of 3 tests of the sell zone before I start to look for a bigger move down. In the next chart there ended up being a total of 5 retests of the sell zone. FOMO would have you think that price is going to break out to the upside and you will miss out on it, but price needs to confirm that first with a break out and then a retest of that level, which never happened.
The second ABC reversal had a period of whip saw action that took out stops like crazy, this is key to trying to spot and avoid at all costs.
Targets would be at the next area of support which were down past the 1.618 fib extension.
Join the InvestorsHub Community
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
