Imagine watching a stock spike and then continue to grind higher and higher without you. Sometimes, a crazy hot sector is all it takes to push a stock through a successful ABCD pattern. It’s also ideal if it’s in a hot sector, has a low float, and has news to boot. The stock has to have a large amount of volume. That’s the second most important indicator after price. If the stock has broken through multi-year resistance and the multiday chart shows it can hold its gains … it’s likely tradable.Īnother key indicator to consider is volume. I know I say this time and time again, but you must have all your ducks in a row before jumping into a trade. Ignore the stock if there’s a lot of resistance overhead or if it has one-and-dones.
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So, you need to consider the multiday chart too. Let’s break it down, step by step… Step 1: Look At All Indicators
#Abcd pattern trading how to#
How to Start Trading Using the ABCD Trading Pattern These build on the ABCD pattern, so know it inside and out! It’s also the basis for a lot of other long patterns like the VWAP-hold, high-of-day break and the OTSwizzle. This prevents chasing a stock and getting shaken out in the midday pullback. The ABCD pattern helps give traders a framework for where to risk and enter their trades. What’s the Importance of the ABCD Trading Pattern? C: Higher low and grind up breaks through the morning high.There’s a letter for each price movement: It’s when a stock spikes big, pulls back, then grinds ups and breaks out to a new high of the day.
![abcd pattern trading abcd pattern trading](https://www.investorsunderground.com/wp-content/uploads/2016/02/ABCDPatternTradeAnatomy.jpg)
The ABCD pattern is an intraday chart pattern.