Quasimodo strategy is one of the best price action trading strategies that traders use to make reasonable profit when trading Forex or Volatility Index assets.
The strategy is one of the strategies that are not indicator based (free of indicators). It is very reliable and easy to trade.
Basically, Quasimodo pattern occurs when price forms a top or a bottom swing/turning point.
Whenever Quasimodo pattern forms at the support or resistance area, it usually gives high probability trade.
When trading divergence, and you observe the formation of Quasimodo pattern, your confidence level on the potential trade will surely increase.
You may spot this pattern on all time frames.
However, the Quasimodo pattern does not appear all the time on the trading chart, but when it does, be rest assured of a good trade setup.
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QUASIMODO (HEAD AND SHOULDER) PATTERN:
Quasimodo traders prefer to trade trend reversals a lot. Quasimodo is also similar to Head and Shoulder pattern.
This strategy involves spotting the exact point where a trend is like to reverse on the trading chart.
Whenever there is a formation of the following three turns; Low, Higher High and Lower Low in an uptrend, this forecasts that the uptrend will likely end.
On the other hand, the formation of the following three turns ; High, Lower Low and Higher High in a downtrend, will forecast that the downtrend price movement is about to end.
HH-LL PRICE MOVEMENT (BEARISH QUASIMODO):
Technically, entering a sell trade when you have a price movement pattern as shown below.
Note the following,
- In an uptrend, price forms fresh High (H) swing/turning point,
- After descending briefly, price turns and make a new Low (L) swing/turning point,
- Thereafter, price rises and move higher than the initial high point to form a Higher High (HH).
- Not satisfied with the direction, price falls and drop below the recent low to form a Lower Low (LL)
- Finally, price rises toward the first high point (H) and drops to form a High point that is lower than the Higher High HH (the second shoulder).
- When falling, if price breaks below the LL area, this will be a confirmation of further BEARISH price movement while will develop to a Bearish Trend.
LL-HH PRICE MOVEMENT (BULLISH QUASIMODO):
Consider entering a buy trade when you have a price movement pattern as shown in the image below.
Note the following,
- In a downtrend, price forms fresh Low (L) swing/turning point,
- After ascending briefly, price turns and make a new High (H) swing/turning point,
- Thereafter, price drops and move lower than the initial low point to form a Lower Low (LL).
- Not satisfied with the direction, price rises and jumps above the recent high to form a Higher High (HH)
- Finally, price slides toward the first low point (L) and jumps to form a Low point that is higher than the Lower Low LL (the second inverted shoulder).
- When rising, if price breaks below the HH area, this will be a confirmation of further BULLISH price movement while will develop to a Bullish Trend.
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