The Quasimodo pattern is a pattern used for the analysis of trends, it is also named the Over and Under pattern. It is used the confirmation of the trader's bias while the price is reversing.
For example, if you see a Quasimodo pattern close to the resistance or support level, it will increase the trader's confidence or trading probability.
Most supply and demand traders will use the pattern to identify a high probability tradable zone and it also gives you a great Risk to Reward ratio when used correctly. This pattern appears across all timeframes and it is also one of the most reliable and powerful trading patterns, reversal patterns appear at the end of an uptrend or downtrend. The Quasimodo pattern is shown by the three peaks and the two valleys as a price formation. The pattern should be so that the middle peak is the highest, whereas the outside peaks are of a similar height.
How does the Quasimodo pattern work?
This pattern works as the market tries to fill the imbalance between supply and demand forces.
What is the Quasimodo pattern?
This pattern is a reversal pattern created after a very significant obvious trend. When the series of a higher high, higher lows, or lower high and lower low gets interrupted, this pattern is formed. It is the double-ended cheater's strategy. It is also used as the intraday pricing turning point. Hence these traders can also use it as the advanced price action pattern for trading.
This is also one of the most profitable chat patterns present in the forex. It even repeats itself throughout all timeframes. The key is to recognize and react to them every time the trading opportunity arises and use the appropriate risk management and stop-loss.
How should I trade Quasimodo?
Buy the trade setup:
Price creates the low
Price creates the high
Price breach the low and also creates a lower low
Then price breaches the high also and forms the high highs
Now, put your pending orders on QML
When the price comes on the low, your pending order may get triggered
Place the stop loss just under the MPL
In this condition, a significant drop occurs in the market. This market now makes a very obvious high and also the low consecutively. Then soon after making the lower low, it shoots up and breaches through the high to make the higher high, breaking the previous structure.
The overall space between QML and MPL is considered the strong demand Quasimodo zone. When that price is back to the zone, the buy limit is triggered, and you can also see how perfectly the price is retraced from the QML level. It then starts to move in the preferred direction.
How do you make a profit?
Take the profit up onto the next resistance/support area. The breached highs or lows must be on the minimum target area. 1:3 is also the standard risk rewarding ratio applied to this pricing action trading strategy.
What is the Quasimodo pattern: a head or shoulder?
Though it looks like a head and shoulder pattern, it is distinctive from a typical head and shoulder pattern. Hence all Quasimodo pattern is the Head and Shoulder pattern. It would help if you also remembered that all Head and Shoulder patterns aren't Quasimodo patterns. To be this pattern, one extra qualification must have needed the price to move far beyond the specified high or low to get either sellers or the buyers.
Is Quasimodo W/M pattern?
The complete structure consists of two engulfing candles, both downsides and up. But the W/M formation also consists of the engulfing up or the downside. The Quasimodo pattern shows on all-time frames.
Then this market is also manipulated to form liquidity. Where the traders are captured, a highly profitable opportunity for trading is created. Quasimodo is also reliable if it is used ideally and may be seen on all time frames from the daily down to a 1 min chart.
Should I remember some time to trade the QM perfectly?
If you wish to trade QM efficiently, you must keep in mind the following things.
Always keep looking for fresh Supply zones/ Quasimodo zones that aren't tested.
Ensure that this distance between MPL and QML isn't too high. If this distance is high, the risk will also be increased, and the risk-to-reward ratio will be poor. Hence when the zone is small, this risk is also small, and an expected reward is huge.
QM is a lot more powerful when the opposite zone gets engulfed and retested
QML is one of the very powerful and reliable patterns to trade. This risk-reward ratio that this pattern holds is very high. This pattern is still not very popular in crypto trading but surely is one of the highly powerful and reliable patterns for trading overall.