Trading Fractal-Based ABCD Patterns with Fixed Stops and Targets

Summary

This strategy identifies potential ABCD harmonic patterns from a sequence of swing points detected with regular or Bill Williams fractals. It converts the pivots into a ZigZag sequence, then checks whether the retracement from A to B falls within a specified range and whether the C-to-D leg meets another ratio range. A qualifying pattern with D below C signals a long; D above C signals a short. A setting selects which fractal definition is used.

The script sets configurable profit and stop distances from the signal entry and places exits while the corresponding directional state remains active. It plots the pattern pivots and the stop and target levels. The document explains the pattern concept and provides code, but reports no test results. Fractal pivots require later bars to confirm, and the code uses a lookahead setting in its pattern function, so signal timing and historical behavior warrant careful review before interpreting a backtest. The fixed-distance inputs and Forex conversion may also behave differently across instruments.

Key ideas

• The strategy builds an alternating pivot sequence using regular or Bill Williams fractals.
• It checks retracement and extension ratios to identify bullish or bearish ABCD configurations.
• A bullish pattern is signaled when the final pivot is below the preceding pivot, while the reverse signals bearish conditions.
• Configurable fixed-distance stop and target levels govern exits, with different conversion handling for Forex symbols.
• The document gives no performance evidence, and delayed pivot confirmation and lookahead behavior complicate backtest interpretation.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.