What is the AB=CD pattern? The four points, bullish and bearish

Each point is a completed swing high or low. In the bullish version drawn at the top of this page, A is a high, B a lower low, C a lower high and D the final low, where buyers may step in. The pattern measures three legs: AB, the first move; BC, the pullback; and CD, the second move in the same direction as AB.

A bearish AB=CD is the mirror image: A is a low, B a high, C a higher low and D a higher high, where sellers may step in. Hypothetical example: A at 80.00, B at 90.00 (AB = 10.00), C at 83.82 (a 0.618 pullback) and D projected at 93.82, where CD equals AB. The ratios are the same in both directions; only the signs flip.

The idea behind the pattern is symmetry: markets often move in measured, repeating swings, so a second push tends to resemble the first. That tendency is loose, not a law, which is why the pattern gives a zone and not a price. The harmonic patterns overview shows how this four-point structure fits into the five-point XABCD family.

Point A and point B
The start and end of the first leg. In a bullish AB=CD, A is a swing high and B a swing low; in a bearish one, the reverse.
Point C
The end of the pullback against AB. It must retrace 0.382 to 0.886 of AB, most often 0.618 or 0.786.
Point D
The projected end of the second leg, where CD equals AB in price and the BC projection agrees. It is the center of the PRZ.
PRZ (potential reversal zone)
The price band around D where several measurements cluster. You watch it for a closed reversal candle; you do not buy or sell it blindly.

AB=CD ratio rules: the C retracement and the CD projection

Two measurements define the pattern. First, C must retrace part of AB: the accepted range is 0.382 to 0.886, with 0.618 and 0.786 the most common. A C shallower than 0.382 is too small to count as a real pullback; a C beyond 0.886 sits so close to A that the structure starts to look like a double top or bottom instead.

Second, the CD leg is projected from BC, and the two ratios are reciprocal. If C retraces 0.618 of AB, a 1.618 projection of BC puts D exactly where CD equals AB; if C retraces 0.786, a 1.27 projection does the same. Because 1 ÷ 0.618 ≈ 1.618 and 1 ÷ 0.786 ≈ 1.27, the deeper C goes, the smaller the projection needed. The cards below show each pairing; Scott Carney’s harmonic method allows BC projections from 1.13 to 2.618, and like all Fibonacci retracement levels these are conventions, not laws.

  • C retraces 0.382–0.886 of AB, most often 0.618 or 0.786.
  • CD projects 1.272–1.618 of BC in the common case, and up to 2.24–2.618 when C is shallow.
  • CD at least equals AB in price before the pattern counts as complete.
  • Ideally CD takes about as many bars as AB (time symmetry, below).

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Six cards pair each C retracement of AB with the BC projection that makes CD equal to AB: 0.382 with 2.24–2.618, 0.50 with 2.0, 0.618 with 1.618, 0.707 with 1.41, 0.786 with 1.27 and 0.886 with 1.13. Each card has a small AB=CD drawn to that depth, and the 0.618 and 0.786 cards are highlighted.

Classic AB=CD vs the 1.27 and 1.618 extensions

Not every CD stops at the length of AB. When the second leg is stronger, it can stretch to 1.27 or 1.618 times AB, a variant Carney calls the alternate AB=CD and TradingView’s help page calls the ABCD extension. TradingView also names a classic ABCD, in which CD equals 1.272 or 1.618 of BC. The labels differ by source; what matters is which leg you measure from.

With the points from the top drawing (A 50.00, B 40.00, C 46.18), the drawing below marks four candidates: 1.272 BC at 38.32, AB=CD (also 1.618 BC) at 36.18, a 1.27 AB extension at 33.48 and a 1.618 AB extension at 30.00. Plan the trade at the first zone, but know where the next one sits. If price closes decisively through 36.18 on large candles, the classic pattern has failed; the extensions mark where the next test may come, not a reason to add to a losing position.

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From A at 50.00, B at 40.00 and C at 46.18, the CD leg runs down past four marked levels: 1.272 BC at 38.32, AB=CD (also 1.618 BC) at 36.18, a 1.27 AB extension at 33.48 and a 1.618 AB extension at 30.00. The first two are bracketed as classic, the last two as extensions.

Time symmetry: comparing AB and CD in bars

Price is only half of the symmetry. TradingView’s help page defines the strict AB=CD as the case where AB and CD match in both time and length. Exact equality is rare, so in practice traders look for CD to take roughly as many bars as AB.

In the top drawing, AB takes 8 bars and so does CD. If CD instead covered the same 10.00 in 3 bars, the second leg would carry far more momentum than the first, and a leg like that is more likely to stretch into an extension than to stop at 36.18. If CD crawled down over 20 bars, the swing would be losing its shape. Neither case rules the pattern out on its own, but both are reasons to demand stronger confirmation.

  • CD takes roughly as many bars as AB: the symmetry supports the zone.
  • CD is much faster than AB, with steep, large candles: be ready for the 1.27 or 1.618 extension.
  • CD is much slower than AB: the swing may be drifting, so wait for a clear reversal candle.
  • Count bars on the same timeframe you use to measure the price legs.

How to draw the AB=CD pattern on TradingView

TradingView’s ABCD Pattern tool sits in the Patterns group of the drawing toolbar on the left of the chart, next to the XABCD Pattern tool. Its help page describes it as a way to mark four-point patterns whose points you place and adjust yourself, and it notes that legs will rarely be exactly equal. The tool does not find patterns for you.

Practice on old charts with Bar Replay, which hides the bars to the right, so you draw each pattern before you see how it ended.

  1. Find a completed AB swing on your timeframe: two clear pivots you could point to without zooming in.
  2. Select ABCD Pattern and click A, then B, then C at the swing highs and lows. In a bullish pattern A and C are highs and B is a low.
  3. Place D where CD equals AB and the BC projection agrees, then move it to the actual turn once it forms. The Coordinates tab sets each point exactly by bar and price.
  4. Check the ratios with the Fib Retracement tool (C against AB) and the Trend-Based Fib Extension tool (D against BC), and compare the bar counts of AB and CD.
  5. Draw it before price reaches D, and don’t drag the points afterward to make a reversal fit.

How to trade the AB=CD: entry, stop and targets

Reaching D is not the signal. Wait for a candle to close back out of the PRZ in the reversal direction: a hammer or a bullish engulfing candle in a bullish pattern, or their bearish counterparts in a bearish one. A wick that pokes into the zone proves nothing until the candle closes.

Place the stop beyond the PRZ with a buffer, not at the exact D price; many traders size that buffer with the average true range. A common target convention measures the CD leg: the first target at its 0.382 retracement and the second at its 0.618 retracement, with point C as a possible final target. Before you enter, check that the first target pays enough for the stop, using the risk-reward ratio.

  • Entry: after a candle closes back out of the PRZ in the reversal direction.
  • Stop: beyond the PRZ, with a buffer for normal noise.
  • Target 1: the 0.382 retracement of CD. Target 2: the 0.618 retracement of CD.
  • Size: risk a small, fixed share of the account; the position size calculator does the math.

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Candles fall from C at 46.18 into the PRZ at D (36.18), and a hammer closes back up at 37.00 to mark the entry. A red box runs down to the stop at 35.50 (1R = 1.50), and green lines mark target 1 at 40.00 (0.382 of CD, 2R) and target 2 at 42.36 (0.618 of CD, about 3.6R).

Worked example: a bullish AB=CD, step by step

A hypothetical stock on a 1-hour chart, with the same points as the drawing at the top of this page. Every number below can be checked with a calculator, and the plan is written before price reaches D.

The same setup could just as easily fail: price could close through 35.50, and the trade would lose about $200, the amount fixed before the entry. That is the point of sizing from the stop.

  1. Swing points: A at 50.00 and B at 40.00, so AB = 10.00, over 8 bars.
  2. C at 46.18: the bounce is 6.18, and 6.18 ÷ 10.00 = 0.618 of AB, inside the 0.382–0.886 range. BC took 5 bars.
  3. Project D two ways. AB=CD: 46.18 − 10.00 = 36.18. BC projection: 1.618 × 6.18 = 10.00, so 46.18 − 10.00 = 36.18 again. The two agree, and that agreement is what gives the zone its weight.
  4. Write the plan: PRZ around 36.18, stop at 35.50, target 1 at 40.00 (36.18 + 0.382 × 10.00) and target 2 at 42.36 (36.18 + 0.618 × 10.00).
  5. Price falls into the zone over 8 bars, prints a low of 36.30, and a hammer closes at 37.00. Entry: 37.00.
  6. Risk: 37.00 − 35.50 = 1.50 per share. Target 1 pays 3.00 (2R) and target 2 pays 5.36 (about 3.6R).
  7. Size: risking 1% of a $20,000 account is $200, and $200 ÷ 1.50 = 133 shares.
  8. Management, decided in advance: for example, take half at target 1 and move the stop to breakeven on the rest. Record the result in your trading journal, win or lose.

Common AB=CD mistakes, and when the pattern fails

The AB=CD fails often, and a failure looks exactly like the setup until it doesn’t. A bullish pattern has failed when price closes decisively below the PRZ and keeps going, usually toward the 1.27 or 1.618 extension. The stop is there to keep that outcome small. Most avoidable losses come from a handful of habits:

  • Buying at D with a resting limit order and no confirmation. In a strong decline, price can slice through the zone without pausing.
  • Choosing pivots after the fact. Move A or B and every ratio moves with it, so mark the swings before D forms.
  • Accepting a C outside 0.382–0.886. A shallow C is noise; a C near A belongs to a different pattern.
  • Ignoring time. A CD that is much steeper than AB often runs to an extension.
  • Setting the stop at the exact D price, where normal noise reaches it.
  • Fighting the higher-timeframe trend or holding through major news. Check the bigger picture with multi-timeframe analysis.
  • Treating the pattern as an edge without testing your own rules, and tuning tolerances until old charts look perfect, the trap described in backtest overfitting.

How the AB=CD sits inside the Gartley, Bat, Butterfly and Crab

Add a starting point X before A, and the AB=CD becomes the last three legs of a five-point XABCD pattern. In the Gartley, the AB=CD usually completes near 0.786 of XA, with CD close to AB. In the Bat, CD is typically extended to 1.27 times AB to reach 0.886 of XA. The Butterfly and the Crab use longer CD legs that complete beyond X.

That is why experienced harmonic traders check the inner AB=CD first: if it does not converge with the XA ratio, the larger pattern’s PRZ is weak. The PRZ trading guide shows how to combine these measurements and confirm a reversal before acting.