The PZ ABCD Retracement Indicator is a technical analysis tool designed to help forex traders identify and trade the AB=CD chart pattern in the market.
This indicator works by automatically scanning price charts for the AB=CD pattern and providing traders with bullish and bearish arrow trading signals based on pre-defined wave ratios.
The AB=CD pattern is a 4-point price structure in which the first price segment is partially retracted and followed by a movement equidistant from the pullback’s finish.
This pattern serves as the foundation for all harmonic patterns and can indicate potential trend reversals.
Traders can adjust the AB and CD wave ratios in the indicator settings to customize the tool to their specific trading strategy. The indicator generates a blue up-arrow trading signal for an upswing and a red down-arrow signal for a downtrend.
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To generate a buy signal with the PZ ABCD Retracement Indicator, traders should wait for the market to be in an uptrend and look for a blue arrow to appear on the chart, indicating a potential bullish reversal.
Once the blue arrow appears, traders can open a buy position and set a stop loss just below the nearest swing low for risk management. They can then set a take profit at the nearest resistance zone or exit the trade when a red arrow appears pointing downwards.
Traders using the PZ ABCD Retracement Indicator should watch for a downtrend in the market and wait for a red arrow pointing downwards to emerge on the chart to generate a sell signal.
Upon fulfillment of these two requirements, traders may open a sell position following confirmation of the signal. The take profit can be determined at the nearest support area or when a blue arrow pointing higher emerges. The stop loss should be positioned slightly above the closest swing high.