StocksToTrade version 2.3.4 offers a new indicator tool, the ABCD Pattern.
You can find this tool within the indicator drop-down menu.
How it Works
The algorithm will first identify three points, A, B, and C, to validate a D point or point of expected price reversal.
The potential for trading occurs between the C and D points, where you will find a price protection zone (PPZ) or area where one may take profits before the expected price reversal.
The blue area indicates these trading levels, established after detecting the C point, where one may take profits on the uptick of the pattern.
The green area highlights the expected price reversal zone (PRZ) or the D point. This is where a trader would enter a short position to take profit on the downside of this pattern.
If the price never reaches this level, we consider the pattern to have failed.
The yellow/orange area and subsequent line levels indicate another PPZ where a trader who entered position at the price reversal zone, or D point, would consider exiting the position to take profits.
A Stop Loss Zone level is also represented by the white area above the PRZ. If a trader wishes to follow the pattern identified by the algorithm, they should exit at this level.