Adam Hayes, Ph.D., CFA, is a financial writer ... When a price pattern signals a change in trend direction, it is known as a reversal pattern. A continuation pattern forecasts that the trend ...

It's a reversal pattern that consists of five points (X, A, B, C, and D) and four legs (XA, AB, BC, and CD.) The rules are: AB is 38.2% to 61.8% of XA. BC can retrace 38.2% to 88.6% of AB but ...