Quasimodo pattern trading strategy guide (PDF)
The Quasimodo (QM) pattern is the largest price action along with a forex trend reversal pattern. That is the ultimate sign of a price reversal. Many successful traders trade the Quasimodo forex pattern because this pattern is an indication of the end of the preceding trend and the start of a new trend. A trade caught from the beginning of a trend will result in a high risk-reward ratio. That’s the principal reason for its importance in forex technical analysis. The Quasimodo trading strategy is considered the best trading strategy in forex technical analysis.
These are valuable training sessions that come up often. So it’s a good idea to get familiar with them.
Quasimodo pattern FAQ
What is the Quasimodo forex pattern?
The Quasimodo (QM) pattern is one of the trading patterns that traders like to trade. As with most patterns, the strategy behind the Quasimodo is not based on indicators so, tends not to lag. The pattern is usually useful in identifying areas around which the market is likely to revolve. From which it is used as a reversal indicator. Some people consider the Quasimodo (QM) pattern similar to that of the head and shoulders pattern.
The figure below shows the Quasimodo chart pattern.
The Quasimodo pattern in forex trading predicts a reversal from an upward to a downward trend.
According to the analogy of market sentiment, there are two types of Quasimodo patterns:
- Quasimodo Bullish, emerging from a downward trend.
- Quasimodo Bearish, emerging from an upward trend.
This is how bullish and bearish QM pattern for forex traders looks like.
What does the QM pattern mean in forex?
Quasimodo in forex refers to an inverted chart pattern that is more useful in technical analysis to predict trend change. As we mentioned above, we can recognize bullish QM and bearish QM. A bullish trend is made of at least two higher highs and two higher lows. Whereas a bearish trend is made of at least two lower lows and two lower highs.
Case Bullish Trend
In the case of a bullish trend, after at least two high highs and Higher Lows when a lower low will appear. So then the trend will reverse. It will decide whether form a range market structure in the future or maybe start a bearish trend.
Case Bearish Trend
In case of a bearish trend, after at least two lower lows and lower highs when a higher high will appear. So then the bearish trend will reverse. Here, the price will then decide either to go with a bullish trend or to form a range price structure.
After a trend reverse either higher or lower low. The price will give a decline to select unfilled orders. In the forex market, we aim to trade with institutions. The goal of a pullback by the price is to pick that selling (in case of a bullish reversal). Or buying (in case of bearish reversal) unfilled orders.
How to identify the Quasimodo pattern?
Market structure is the continuous series of higher highs and higher lows. It leads to higher peaks and troughs. When we have a structural break, which means a break in the current HH and HL. The price first starts printing a lower low. The Quasimodo model in forex trading operates on the basis of unbalanced supply and demand forces. In other words, the Quasimodo chart pattern follows the trend in the price structure.
The forex chart below outlines a bullish QM pattern on the EUR/USD 1 hour timeframe.
Trading example with QM Pattern
Trading Example 1
Quasimodo pattern trading strategy in the forex market, provides an appropriate framework. This enables traders to interpret the constant ebbs and flows of any asset (currency, cryptocurrency, equities, commodities, etc.).
Quasimodo bearish pattern is in short concerned with how the market is driven by the purchase forex trend and moving towards sales momentum.
The Quasimodo pattern begins to become visible only when the price does not succeed in making another higher low (HL).
For some novice forex traders, this sort of information might be so helpful. Because now forex traders can have a proper framework to analyze the price structure. It is important to remember that this is one way to look at markets and not the only way.
-
Trading Example 2
The Fibonacci retracement can be helpful in anticipating where the last price variation that is part of the Quasimodo chart pattern might end like ABCD Trading Pattern. If you go back and test this pattern, you will see a lot of missed trading opportunities. Because the last swing wave of the Quasimodo pattern doesn’t always near the left shoulder. Fibonacci retracement levels can help us identify trusted price areas of support and resistance. Another important point to consider when trading the Quasimodo pattern is the quality of swing highs and lows. We need to find a mechanical way to quantify the quality of swing highs and swing lows.
As a general rule, we only consider those points with a V-shaped pattern to qualify as swing highs (swing lows). These price patterns are also known as V tops and V bottoms. V-shaped swing lows are easy to identify when the price turns from bearish to bullish or vice versa.
If we examine the price structure of the chart below and the Quasimodo chart pattern. We can see that each swing high and swing low portion of the Quasimodo pattern is V-shaped.
Here is the Forex chart.
Trading Example 3
Now for supply and demand zone and higher timeframe analysis. Each element can help catch buying and selling opportunities using the Quasimodo pattern in forex trading. The supply and demand zone will help forex traders to pinpoint their entry. The trend analysis helps also the trader identify the QM pattern. Because there must be a clear trend before the formation of the Quasimodo forex pattern. And a Higher time frame analysis is a necessary step to follow each time before entry. The higher timeframe trend must be consistent with the lower timeframe setup.
Conclusion
In summary, Quasimodo pattern trading is a new technique. It is useful to figure out trend reversals. Forex traders should not be afraid to give it a try just because as we said it’s a new chart pattern method. When all the elements of this reversal pattern come together. The forex trader have a high probability of success. With Quasimodo trading strategy, traders now have a proper framework to deal with the highly volatile forex market.