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What is Quasimodo Pattern?
The Quasimodo pattern is a reversal pattern that you may find at the top or bottom of a trend. Quasimodo, meaning the hunchback character from the musical The Hunchback of Notre Dame, shows a deformation in a trend. The name Quasimodo comes from the Disney character who is deformed and rejected by society.
Difference between Quasimodo Pattern and Head and Shoulder Pattern
The Head & Shoulders pattern is a very common pattern, and the Quasimodo pattern is a variation of it. These are very powerful patterns, so it’s good to know how to recognize them, how to identify them, and of course, how to trade them. Both patterns are trend reversal patterns – they form when there is slowing momentum in a trend and the potential start of a new trend. There are two main differences between trading the Quasimodo pattern and trading the Head and Shoulders:- Valleys have a different price structure – aka the depth of the valley has no symmetry with the Quasimodo pattern.
- And, the two reversal patterns use two different entry techniques.
The main difference between the Quasimodo pattern and the Head and Shoulder pattern is that the left leg (second valley) of the Quasimodo is much lower than the right leg (first valley). With the Head and Shoulder pattern, both valleys are roughly the same scale. The Quasimodo price structure is not as pronounced as the HS pattern.
What is the Head and Shoulder Pattern?
The head & shoulders pattern is formed when we have an uptrend that forms higher highs and higher lows. Then a low, not higher than the previous one but at the same price, on the same line, forms what is called the "neckline", then the next high forms lower than the previous one, then reversing the trend.
In the head & shoulders pattern, we have a left shoulder, a head, and a right shoulder. This forms the neckline, and a break of the neckline will confirm the reversal of the trend and the completion of this pattern.
Candlestick Pattern: Complete Explanation, Single, Dual, to Triple
Easy Guide To Trading Using Quasimodo Pattern
The Quasimodo Pattern or Over and Under Pattern is a relative newcomer to the technical analysis field in the financial markets. Although new, the Quasimodo Pattern is a common theme that occurs more often when price carves out a top or bottom or when price begins a major correction against the trend. The Quasimodo Pattern, although it looks complicated, is actually very simple.
This trading pattern is so powerful because when it occurs, in most cases, traders will see confluence with other methods of analysis. For example, when a trader sees a Quasimodo pattern near a support or resistance level, it increases the trader’s confidence or probability of the trade. Likewise, when trading divergences, when you see a Quasimodo pattern, the confluence can be used to trade the divergence setup with more confidence.
As we can see above, the Quasimodo pattern is not a trading strategy in and of itself but rather a confluence pattern that can be used to confirm a trader’s bias. Of course, the Quasimodo pattern does not occur all the time, but when it does, traders can be confident that the market is offering a high probability trade setup.
How Does Quasimodo Pattern Trading Work?
The Quasimodo pattern works on the imbalance between the forces of supply and demand or in other words, the Quasimodo chart pattern tracks the shift in price structure. Market structure is a continuous series of higher highs and higher highs that result in higher peaks and valleys. When we have a break of structure, meaning a break of the ongoing HH and HL, price starts to print lower lows first.
The Quasimodo trading strategy gives us a proper framework to interpret the constant ebb and flow of any asset (currency, cryptocurrency, stocks, commodities, etc.). The bearish Quasimodo pattern in a nutshell relates to how the market comes from buying momentum and goes into selling momentum. The Quasimodo chart pattern starts to appear only after the price fails to make a higher low (HL).
What is Quasimodo Pattern in Forex?
Quasimodo Pattern is also called as OVER & UNDER Pattern. It is a reversal pattern created after a significant real trend. When a series of higher highs, higher lows, or lower highs are interrupted, Quasimodo Pattern is created. It is a double ended cheater strategy.
It is used as an intraday price turning point. So Intraday traders can use it as an advanced price action trading pattern.
Quasimodo is one of the most profitable chart patterns in forex. It repeats itself all the time. The key is to identify, and most importantly, react to them, when trading opportunities arise.
Quasimodo Pattern Trading Setup Is
Quasimodo pattern trading is very simple but trading with confluences is a tough task. Let me show you first about stop loss, take profit and entry level. In the next topic, we will also discuss confluences to add.Entry :
As discussed, when price will give a pullback then it will pick the unfilled orders and the key level here is the left shoulder level. We will wait for price to retrace to the left shoulder level and then we will enter. There is a good strategy here to add the supply and demand zone at the left shoulder level as an entry point. I will show you in the next heading. Here just remember the left shoulder as the entry-level.Stop Loss :
Stop-loss level will be above the higher high or below the lower low. Look at the image below for a clear understanding.Take Profit :
Take profit level will be the recent lower low in case of a bullish reversal. In case of a bearish reversal, the take profit level will be at the higher high.Use Quasimodo In Your Forex Trading
As mentioned that the quasimodo pattern is a very profitable pattern strategy for forex traders. You can use this pattern strategy to get more profit. Choose your trading platform to support you in trading. Download GIC Mobile Apps on the Google Play Store and Apple App Store. Make sure to register to be able to trade on GICTrade.
