Alternate AB=CD Patterns: 1.27 and 1.618 Extensions

A Numerical Example: Nova Corp (NVA)\n\nLet's consider the fictional stock Nova Corp (NVA) to illustrate the 1.27 AB=CD pattern. The stock has been in an uptrend and has formed the following pivot points:\n

• A: $100
• B: $110
• C: $103.82

We can see that the BC leg has retraced to the 0.382 level of the AB leg. This suggests that the CD leg will project to the 1.27 extension of the AB leg. We can calculate the completion point of the pattern as follows:

D = $103.82 + ($110 - $100) * 1.27 = $116.52

D = $103.82 + ($110 - $100) * 1.27 = $116.52

This gives us a potential reversal zone at $116.52. A trader could look to enter a short position at this level, with a stop-loss order placed above the high of the pattern.

Conclusion\n\nThe alternate AB=CD patterns are effective trading setups that can provide traders with a significant edge in the markets. By understanding these variations of the classic pattern, traders can identify more trading opportunities and increase their profitability. It is important to remember that these patterns are not foolproof, and risk management should always be a top priority. By combining the alternate AB=CD patterns with other forms of analysis, traders can increase their confidence in their trading decisions and achieve consistent results.\n\n### References\n\n[1] Gartley, H. M. (1935). Profits in the Stock Market. Lambert-Gann Publishing.\n[2] Carney, S. M. (2010). Harmonic Trading, Volume One: Profiting from the Natural Order of the Financial Markets. FT Press.