AB=CD, Bullish

Core idea

The bullish AB=CD is a four-turn harmonic with the same Fibonacci spine as its bearish cousin, flipped vertically: A high, B low, C high, D low — and D is calculated by D = C − (C − B) / R where R is the BC retrace ratio of AB. Price reaches the calculated D nearly 100% of the time in bull markets (Bulkowski found 3 misses out of 1,741). It then reverses at D only about 38% of bull-market patterns and 33% of bear-market patterns. The take-away is identical to the bearish version: trust the projection, not the prediction.

When the reversal does work

For patterns that do turn at D, the bull-market breakeven failure rate is just 3–12%. The average rise after a valid D-reversal is around 30–38% — respectable but below the 42.4% average of non-Fibonacci bullish patterns. Bear-market AB=CD trades, oddly, beat non-Fib patterns (30.5% vs 28.1%). The pattern earns its keep when used as a target-projection tool inside a broader bullish setup.

Why it matters

The pattern's high projection accuracy converts an unknown — "where might this stock bottom?" — into a price you can act on. Combine that with the measure rule (height A − D added to A gives an upward target after breakout) and you have entry, target, and an invalidation level all derived from the same four turns. Few other patterns hand you that much pre-computed structure.

Key takeaways

Mental model — projection and outcome

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Identification guidelines

• CB/AB retrace. (C − B) / (A − B) must equal one of the listed Fibonacci ratios (~.382, .5, .618, .786) within ~0.5%.
• CD/CB extension. (C − D) / (C − B) must equal 1 / R. Equivalently, D = C − (C − B)/R.
• Hills and valleys. No interim swing pivot inside the pattern that violates the ABCD ordering (see Bulkowski's full table).
• Duration cap. Six months.
• Volume. Trends upward slightly more often. Trend direction is near random but useful as a tiebreaker.

How the pattern fails

1. Price overshoots D. The most common failure (62% bull, 67% bear). Price continues lower past the projection. Stops below D get hit.
2. Price does not reach D. Extremely rare. Pattern is invalidated.
3. D forms but the bounce is shallow (≤5%). The "breakeven" failure — counts as a loss after commissions and slippage.

Practical application

A pragmatic trade plan

1. Software identifies ABC. Compute projected D and projected D-date = (C − B) / Ratio + C.
2. Set an alert at D ± 1%.
3. When price reaches D, wait for one confirmation bar (close above the bar that touched D).
4. Buy at the next open. Stop below the D bar low.
5. First target: peak B (closest pattern turn). Final target: peak A (top of pattern) or A + (A − D) on a confirmed close above A.
6. If price closes more than 1% below D without confirmation, abandon the long — the pattern has likely failed.

Example: the George trade reframed

A trader's software flags an ABCD on a low-priced stock. A = 6.65, B = 5.81 (84-cent leg), C = 6.55, projected D = 5.71. Price drops to a high-low range of 5.94–5.59 — touches the target and forms a minor low. The trader buys the next open at 6.02 after a strong push from D and uses the standard measure rule: pattern height = 6.65 − 5.59 = 1.06; upward target = 6.65 + 1.06 = 7.71 (≈18% upside). A more conservative half-height target sits at 7.18 (≈9%).

Two trade plans share the same pattern: the aggressive plan buys near D, risks 0.40, and targets 7.71 (4.2:1 reward-to-risk on the full measure). The conservative plan waits for a close above A at 6.65, enters at 6.80, risks to 5.55 (below D), and targets 7.71 — a 0.7:1 trade that exists only because the harmonic pattern projected the bottom.

Where this fits in the family

AB=CD's bullish form is the foundation other harmonic patterns refine. The bullish bat (Bat, Bullish) adds a fifth turn (X) and a tighter ratio (.886) and substantially improves the reversal rate (91% at D in Bulkowski's sample), at the cost of being rarer. If you cannot find a bat, the bullish AB=CD remains a workable, more common projection tool — just respect the asymmetry between projection and reversal.

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