The
Alternate AB=CD Pattern
Since the AB=CD
pattern is the basic framework of all harmonic patterns, it
is an essential consideration in defining any Potential
Reversal Zone (PRZ). Although the equivalent AB=CD pattern
has been utilized by technicians for quite some time, the
idea of an alternate calculation to define other Harmonic
patterns was originally outlined in The Harmonic
Trader.
Alternate patterns provide an effective means of
complimenting other significant Fibonacci calculations,
especially when the equivalent AB=CD is not relevant for a
particular set-up. The alternate AB=CD pattern
differentiates patterns, as well. For example, the AB=CD in
a Gartley is usually equivalent, while the Bat utilizes an
alternate 1.27AB=CD pattern. These two similar patterns
require completely different AB=CD conditions to validate
their respective structures. This degree of differentiation
increases the validity of pattern identification techniques
and reduces the overall risk by defining the most precise
Potential Reversal Zones (PRZ).
