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Chapter 4. The AB=CD Pattern > The Perfect AB=CD Pattern

The Perfect AB=CD Pattern

The Perfect AB=CD pattern is primarily defined by the C point that should be a precise 0.618 retracement of the AB leg. Ideally, the B point should be tested but not exceeded measurably. The 0.618 C point retracement sets up the 1.618 BC projection. Although a 1.618 extension usually indicates an extreme area from a Fibonacci perspective, these frequently yield significant reactions, especially in perfect AB=CD patterns.

These structures are typically quite symmetrical and possess the most ideal of geometric structures. For obvious reasons, the 0.618 and 1.618 within the perfect AB=CD pattern represent the most harmonic ratios that are directly derived from the Fibonacci sequence. Another aspect of the perfect AB=CD pattern is the general time consideration, where each leg should be exactly equivalent in duration. Although an exact time length for each price leg is not required, each segment of the pattern should be distinctly symmetrical.


  

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