"One Good Trade" by Suri Duddella - May 10, '23
Consistent ABC Pattern
Consistent ABC Pattern
The ABC Chart pattern and its related AB=CD Chart Pattern are prime examples of market symmetry. These "Harmonic" patterns help traders identify buying and selling opportunities in all market instruments and time-frames. The main advantages of trading harmonic patterns are that they allow traders to determine risk vs. reward ratios beforehand as they forecast key market turning points and profit targets for traders.
ABC patterns are powerful and universal patterns and have been my bread and butter-patterns since 2000. I have developed an auto-detection process of ABC patterns with market context and built my trading/execution method. Here is one of the ABC patterns detected in the @ESM23 1220T chart, and I'll describe how I traded today.
Trade Setup
@ES (Emini S&P Futures) gapped up open today and attempted to rally as it traded above the pivot level suggesting higher prices for the day. After opening, @ES sold off the next 75 minutes to fill the opening gap. Around 10.45 am, prices stabilized and formed a small ABC Bullish pattern in @ES 1220Tick chart. Prices formed a valid ABC pattern around Fib. Bands with a confirmed eSIX/SuperBars uptrend and market internals (CMI). Price closing above entry-level and TrendST level signaled a potential ABC bullish trade.
How was it traded
@ES trade setup entry was above 4130 with an initial stop loss below 4127 (5 points). The target levels are 4137, 4142-44 and 4150-5154 on a continued trend. TrailStops indicator is set to protect the trade profits or any trend changes. A medium size trade size (6 contracts) was used with a potential loss of 20-30 points and a maximum profit of 50-90 points. Around 10.53 am, a long trade was entered at 4132.25 with a stop below 4127. At 11.21 am, the first target was hit at 4141 (9/c). A trend change in eSIX/SuperBars and a close below ST Level signaled lower prices and triggered the exit of the trade at the 4144 level. This trade was never in a losing mode and marks as "One Good Trade" for the day.
Trade Stats
Maximum Potential Profit (6 contracts): 10-15 points/contract
Maximum Potential Loss (6 contracts): 5 points/contract
Realized Profit: 11 Points/contract
Execution Efficiency: 0.73
Trade Setup Confidence: 70-75%
Tools Used
Auto ABC Pattern with Stops/Entry/Targets
Fib. Bands
eSIX
Combined Market Internals
SuperBars