As of 10/29/2020   Indus: 26,659 +139.16 +0.5%     Trans: 11,184 +237.90 +2.2%     Utils: 868 +2.32 +0.3%     Nasdaq: 11,186 +180.72 +1.6%     S&P 500: 3,310 +39.08 +1.2% YTD -6.6%    +2.6%   -1.3%    +24.7%    +2.5% Overview: 09/29/2020     29,300 or 27,400 by 11/01/2020   12,000 or 11,000 by 11/01/2020   915 or 840 by 11/01/2020   12,800 or 11,300 by 11/01/2020   3,700 or 3,400 by 11/01/2020 CPI (updated daily): on 10/23/20
 As of 10/29/2020   Indus: 26,659 +139.16 +0.5%     Trans: 11,184 +237.90 +2.2%     Utils: 868 +2.32 +0.3%     Nasdaq: 11,186 +180.72 +1.6%     S&P 500: 3,310 +39.08 +1.2% YTD -6.6%    +2.6%   -1.3%    +24.7%    +2.5% Overview: 09/29/2020     29,300 or 27,400 by 11/01/2020   12,000 or 11,000 by 11/01/2020   915 or 840 by 11/01/2020   12,800 or 11,300 by 11/01/2020   3,700 or 3,400 by 11/01/2020 CPI (updated daily): on 10/23/20

# Bulkowski on the Simple ABC Correction

The simple ABC correction is a measured move down chart pattern nested inside a measured move up. If measured moves are unfamiliar, then click the associated link for more information. My book, Encyclopedia of Chart Patterns, pictured on the left, has a complete discussion of measured moves.

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-- Tom Bulkowski

\$ \$ \$

## Simple ABC Correction: Identification Guidelines

 Characteristic Discussion Nested The simple ABC correction is a measured move down chart pattern nested inside a measured move up. Chart See the above chart. Point D must be below point C, meaning that the measured move down (MMD: EABC) must not correct too far. MMDs that correct too far fail more often. Corrective phase The corrective phase of the large MMU is an MMD, like the ABC pattern shown in the above chart. Only one MMD should be present with two straight-line runs, EA and BC. Discard patterns with pronounced turning points within those two down legs. Points Within the MMD, points A, B, and C are below E. Be especially careful that B not be above E. Point C starts a major price up swing.

## Simple ABC Correction: Trading Tips

Reference the figure on the right.

 Trading Tactic Explanation Trendline Draw a trendline from E to B and extend it downward. When price closes above the trendline, buy. Swingers For aggressive traders, draw a trendline down from B along the tops and buy when price closes above it. A close above the intraday high at A (blue trendline) also works as a buy signal. Buy For conservative investors, a close above B or even E is the buy signal. Reverse Be prepared for price to reverse at the price of E -- 36% do and prices drop, confirming a double top.

## Simple ABC Correction: Example

The above figure shows an example of a simple ABC correction chart pattern. Point A begins the chart pattern, B is the middle turning point, and C completes the pattern. Another simple ABC correction occurs at points 1, 2 and 3.

-- Thomas Bulkowski

## Simple ABC Correction: Other Examples

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