A bearish AB=CD pattern is the opposite of its bullish counterpart. It typically forms during an uptrend and signals a potential reversal to the downside. The pattern consists of four price points, forming specific geometric shapes, where the CD leg retraces a specific Fibonacci ratio of the AB leg.
Traders look for this pattern as a signal to potentially enter short positions, expecting the price to decline following the completion of the pattern. However, as with any trading pattern, it's important to confirm its validity using other technical indicators or analysis techniques before making trading decisions. Additionally, risk management strategies should always be applied to mitigate potential losses.
Traders look for this pattern as a signal to potentially enter short positions, expecting the price to decline following the completion of the pattern. However, as with any trading pattern, it's important to confirm its validity using other technical indicators or analysis techniques before making trading decisions. Additionally, risk management strategies should always be applied to mitigate potential losses.