PZ ABCD Retracement Indicator

PZ ABCD Retracement is a technical indicator developed by Arturo López Pérez in 2014. Arturo López Pérez is the creator of Point Zero Trading Solutions and a private investor and speculator. The PZ ABCD retracement indicator for MT4 automatically scans the forex price charts for the ABCD chart pattern and warns traders with an arrow trading signal. The indicator generates Bullish and Bearish arrow trading signals based on pre-defined wave ratios, which traders may further tweak as needed.

What is the PZ ABCD Retracement Indicator?

The PZ ABCD Indicator is a technical tool used by traders to check retracements. This indicator works on all intraday price charts as well as daily, weekly, and monthly price charts. Furthermore, the indicator is suitable for both novice and experienced forex traders. New traders may immediately spot and trade the pattern, however professional traders can devise intricate trading methods and use automated trading strategies. The PZ ABCD Retracement indicator detects AB=CD patterns in the markets. The AB=CD Retracement pattern is a 4-point price structure in which the first price segment is partially retracted and followed by a movement equidistant from the pullback’s finish. This market behavior of assets serves as the foundation for all harmonic patterns.

Setting up the PZ ABCD Retracement Indicator
Setting up the PZ ABCD Retracement Indicator

PZ ABCD Retracement Strategy

The PZ ABCD Retracement Strategy is a trading strategy that displays bullish and bearish waves, and arrow trade signals. Furthermore, technical forex traders may change the input of AB and CD wave ratios in the indicator settings.  An upswing is indicated by the appearance of the blue up arrow trading signal. As a result, forex traders might join the market with a BUY position and a stop loss below the previous swing low. In general, the ideal time to take profit is near the end of the CD wave. Traders, on the other hand, can expect to book profit with an attractive risk to reward ratio. Similarly, the indicator shows a red down arrow indication, suggesting the start of a downtrend. As a result, forex traders could enter a SELL position with a stop loss above the previous swing high. Traders, on the other hand, can follow the ABCD wave and take gains at the conclusion of the CD wave.

Buy Signal

The following could be your checklist for a buy trade:

  • When the market is in an uptrend.
  • When a blue arrow appears pointing upwards.

Once these two events occur:

  • You could open a buy position after the blue arrow pops up and you get your signal confirmation.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when a red arrow appears pointing downwards.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
PZ ABCD Retracement Indicator Buy Setup
PZ ABCD Retracement Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the market is in a downtrend.
  • When a red arrow appears pointing downwards.

Once these two events occur:

  • You could open a sell position after the red arrow pops up and you get your signal confirmation.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when a blue arrow appears pointing upwards.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
PZ ABCD Retracement Indicator Sell Setup
PZ ABCD Retracement Indicator Sell Setup

PZ ABCD Retracement Pros & Cons

Pros

  • The PZ ABCD Retracement Indicator presents simple ABCD chart patterns which traders can use to enter or exit trades after confirming signals.
  • The indicator predicts possible trend reversal.

Cons

  • The colored lines of the indicator may sometimes change without a change in the market trend.
  • This indicator may not be very suitable for a narrow-ranging market.

Conclusion

The PZ ABCD Indicator has been on the market for over 6 years, but this does not make the indicator a sure banker. The PZ ABCD retracement indicator for MT4 does actually assist the trader in automatically scanning the charts.  The user ratings are mixed, including both favorable and negative evaluations. This indicator can be useful in conjunction with other technical indicators to supplement and provide more trade signals, but not on its own.