The Complete Guide to XABCD Patterns

The XABCD pattern is a harmonic chart pattern. The traders use it to forecast when one trend will end and a new one will start. They are among the most effective patterns in technical analysis when used in conjunction with Fibonacci retracement levels.

In this article, we will cover everything related to XABCD harmonic pattern. We will mention the benefits and challenges of XABCD patterns, XABCD pattern trading, and finally, the categories of XABCD patterns.

What is a XABCD Pattern? (XABCD Pattern Explained)

The XABCD harmonic pattern drawing tool enables analysts to call attention to a variety of 5-point chart patterns. It was created by Harold McKinley Gartley. Users manually draw and move the five distinct points (XABCD). In order to create chart patterns, the XABCD points form 4 separate legs. Names for the 4 legs include XA, AB, BC, and CD.

The traders use the XABCD pattern indicator to identify the potential trend reversal from bearish to bullish for a successful trade.

Each of the 5 points (XABCD) on the chart represents an important high or low in price. So, the four legs we’ve already talked about (XA, AB, BC, and CD) represent different price movements or trends that go in opposite directions.

Benefits and Challenges of XABCD Patterns

Here’s a list of the benefits of the XABCD Pattern.

  • Consistency: You can adopt a consistent strategy for your execution as well as for how you address your trade and the risk of each trade.
  • Black-and-white decisions: Decision-making is rather black-and-white in comparison to other training approaches. It’s objective, unlike Elliott Wave patterns, where different people may count waves in different ways.
  • Workflow automation: Since discovery and scanning can be difficult, especially for novice traders, a significant portion of the labor can be automated.

There are a few challenges of XABCD patterns:

  • Learning Curve: There is a learning curve that requires an understanding of technical analysis and chart patterns.
  • Time-Consuming: Identifying and interpreting XABCD patterns can be time-consuming, and traders need to constantly monitor their charts to look for potential patterns.

How to Trade XABCD Patterns?

To learn XABCD trading, you first have to identify it. The XABCD pattern, which features a D point between its X and A point, can be used as a retracement pattern.

You should observe the D point to enter the trade because it has a potential reversal zone surrounding it.

Similar to the ABCD harmonic pattern, you should wait until the price reaches the D point before setting your take-profit and stop-loss settings.

The C point would be the take profit objective.

Categories of XABCD Patterns

Retracement, extensions, and x-point patterns are the three subcategories of XABCD patterns. We’ve split them down here and provided you with a brief summary of each.

Retracement Time Patterns (RTP Patterns)

RTP patterns are any XABCD patterns with a D point that doesn’t supersede the X point of the pattern. The D point, or the point at which we would want to see the price reversal, will be present in these patterns near the B point. It is important to know which RTP XABCD pattern to use in which case since several RTP XABCD patterns might be utilized in channels or ranges.

Extension Time Patterns (ETP Patterns)

These XABCD patterns refer to specific price formations that indicate potential trend reversals or continuations. They are named as such because they extend from previous price moves and suggest the formation of an XA, AB, BC, and CD swing.

For example, a Bullish Butterfly pattern is a bullish extension pattern that signals a potential reversal from bearish to bullish. It forms after a downtrend and consists of four price swings: XA, AB, BC, and CD, where AB and CD are equal in length and extend beyond XA.

bullish butterfly

The Auto Harmonic Pattern recognition software is designed to take the heavy lifting out of a traders Harmonic trading strategy. The Software automatically Identifies and Projects XABCD Harmonic Pattern Completion Zones for the 6 most trade-able Harmonic Patterns.  If the Pattern Completes in the projected zone, then there is a high probability of the resulting trade being successful. Available for TradingView, NinjaTrader, MT4, TradeStation and ThinkorSwim trading platforms.

X-point Time Patterns (XTP Patterns)

All the ratios for X-Point patterns are based on the X-point of the XABCD pattern. These can also be applied to our members’ confirmation mode and real-time scanners. The two main patterns we scan are the XTP 1 and XTP 2 patterns.

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