The three drives pattern consists of a series of upper highs or higher lows. It is similar to the ABCD pattern. The difference is that a Three drives pattern is made of 5 legs, while an ABCD pattern has only 4.
Three-Drives is a reversal pattern, so it signals an upcoming change in a trend.
The key parameters of a three drives pattern are:
- Point A is at the 61.8% retracement of the drive 1.
- Point B is at the 61.8% retracement of the drive 2.
- Drive 2 is at the 127.2%-161.8% extension of A.
- Drive 3 is at the 127.2%-161.8% extension of B.
The worth should spend equal time on forming the drives 2 and three. Corrections A and B should also take equal time.
The ABCD pattern is an easy-to-identify chart pattern that consists of two equivalent price legs. It is a harmonic pattern that helps traders predict when the worth of a stock is close to change direction.
The pattern are often wont to predict either a bullish or bearish reversal counting on the orientation. It is particularly important as it appears very frequently in stock charts.
This pattern begins with a robust upward move – initial spike (A), during which buyers are aggressively buying thus pushing the stock price thereto high-of-day. Inevitably, buyers start to sell their shares so as to require profits.