Quasimodo Trading Strategy

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Quasimodo Pattern

Quasimodo pattern is one of the trading patterns that traders love to trade. The strategy is not based on indicators and therefore tends not to lag. The pattern can be used to identify areas where the market is likely to turn around hence it’s used as a reversal indicator.  Some people view the Quasimodo pattern as being similar to the head and shoulder pattern.

The difference between the Quasimodo pattern and the head and shoulder pattern in that for the Quasimodo, the valleys are not symmetrical while for the head and should pattern the valleys are symmetrical. The two also have different entry techniques.

The pattern can be used to add more confluence to your trading. For example, if the pattern forms at an area of support or resistance, it gives the trader more confidence to take the trade since the chances of the trade working out are high.

The Quasimodo pattern can be used in all timeframes and in all asset classes. A point to note is that on lower timeframes there may be a lot of noise leading to false signals and it’s hence advised to trade the pattern from a H1 timeframe and above.

Quasimodo Pattern Trading rules

Bearish setup

  • A prevailing uptrend needs to present. Market should have been making a series of HH (higher highs) and HL (higher lows).
  • Market then breaks structure by breaking a recent HL to form a LL (lower low). The market starts to form LH (lower highs) and LL.
  • Place your entry at the high of the left shoulder.
  • Stop loss is placed above the last recent HH (Head of the pattern).
  • Take profit 1 is placed at the most recent valley.

Bullish Setup

  • A prevailing downtrend needs to present. Market should have been making a series of LH (lower highs) and LL (lower lows).
  • Market then breaks structure by breaking a recent LH to form a HH. The market starts to form HH and HL.
  • Place your entry at the low of the left shoulder.
  • Stop loss is placed below the last recent LL (Head of the pattern).
  • Take profit 1 is placed at the most recent peak.

Let’s look at some live examples.

Bullish Quasimodo setup

Bearish Quasimodo setup

Adding Confluence to Quasimodo

After strategy testing this pattern or trading it for a while, you realize that you may end up with a lot of missed trades. Like any other strategy it’s not the holy grail of forex but can be a powerful arsenal to use in your trading if paired up with the right confluences like Fibonacci.

You don’t need to make the trading complicated, all you need is the good old Fibonacci set at levels of 0.5, 0.68, 0.786. Price doesn’t need to fully come back to the left shoulder. Sometimes price may pull back further beyond the left shoulder. The Fibonacci levels paired with support and resistance makes trading the Quasimodo pattern a highly profitable system with sniper entries.