In this blog post, we’ll dive into the Quasimodo (QML) chart pattern, a popular tool for traders. The QML chart pattern is a reversal pattern that signals a potential trend change, especially when it appears at key support or resistance levels on higher time frames.
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What is the QML Chart Pattern?
The Quasimodo (QML) chart pattern is widely used by day traders to predict price reversals at important levels, such as higher time frame supply or demand zones, and support or resistance levels. This pattern is identified by a shift in the price structure, showing a higher high and lower low at the end of an uptrend or a lower low and higher high at the end of a downtrend.
Types of QML Chart Patterns
There are two main types of QML chart patterns based on the trend:
1. Bullish QML Chart Pattern
A Bullish QML pattern appears at the end of a downtrend when the price hits a key support level. Normally, in a downtrend, the price forms lower lows and lower highs. However, when it reaches a crucial support level and makes a higher high, breaking the previous lower high, it forms a Bullish QML pattern. This signals a potential trend reversal from bearish to bullish.
How to Trade a Bullish QML Chart Pattern:
- Identify the Lows: Find the second-to-last low and the last low before the QML pattern forms.
- Mark the QML Area: Draw a zone between these two lows (QML area).
- Search for Opportunities: Look for imbalances, demand zones, or FTR levels in this area.
- Enter the Trade: Place a buy trade when the price touches this area, or wait for a confirmation like a Market Structure Shift on a lower time frame.
- Set Stop-Loss and Take Profit: Put your stop-loss below the last low (QML low) and target the last high (QML high) for your take profit.
2. Bearish QML Chart Pattern
A Bearish QML pattern forms at the end of an uptrend when the price reaches a key resistance level. In an uptrend, the price usually makes higher highs and higher lows. But when it hits a significant resistance level and makes a lower low, breaking the previous higher low, it creates a Bearish QML pattern. This indicates a potential reversal from bullish to bearish.
How to Trade a Bearish QML Chart Pattern:
- Identify the Highs: Locate the second-to-last high and the last high before the QML pattern forms.
- Mark the QML Area: Draw a zone between these two highs (QML area).
- Search for Opportunities: Look for imbalances, supply zones, or FTR levels in this area.
- Enter the Trade: Place a sell trade when the price touches this area, or wait for a confirmation like a Market Structure Shift on a lower time frame.
- Set Stop-Loss and Take Profit: Put your stop-loss above the last high (QML high) and target the last low (QML low) for your take profit.
Understanding the QML Chart Pattern
The QML pattern is built on the concept of Change of Character (CHOCH). This means when the price shifts its trend and breaks a key lower high or higher low in a bullish or bearish trend, it’s known as a change of character. Sometimes, the QML pattern can indicate a price reversal even before a CHOCH occurs.
Why is the QML Chart Pattern Important?
The QML chart pattern is important because it helps traders spot potential trend reversals at key levels, improving their chances of making successful trades.
Can the QML Chart Pattern Be Used on Any Time Frame?
Yes, the QML chart pattern works on any time frame. However, it’s most effective when identified at higher time frame support or resistance levels.
How Do Traders Use the QML Chart Pattern?
Traders use the QML chart pattern to predict price reversals at key levels like higher time frame supply or demand zones, and support or resistance levels. This pattern helps traders find potential turning points in the market, giving them better entry points for their trades.
For more information and examples, you can download my ICT Trading Strategies PDF eBook from fxmarkethours.com.
