## QM Pattern in Trading: A Tool for Identifying Trend Reversals

### Introduction: Why You Should Know About QM Pattern

When discussing chart patterns in trading, you often hear about Head and Shoulders, Triangle, or Wedge formations. However, QM Pattern is a relatively unique pattern. Its full name is Quasimodo Pattern, inspired by a character with distinctive features in the novel "The Hunchback of Notre-Dame." This pattern is used to indicate that a price trend is about to reverse, serving as an important signal that traders should recognize.

### Structure and Unique Characteristics of QM Pattern

The QM Pattern resembles the Head and Shoulders pattern in terms of the number of points or swings. However, the key difference lies in its asymmetry. In the Head and Shoulders pattern, the left and right shoulders are usually of similar height. In the QM Pattern, the right shoulder is significantly lower or higher than the left shoulder, making the pattern look like an M or W that deviates from balance.

The formation process of the QM Pattern involves specific steps. When the price creates a new low (Lower Low) or a new high (Higher High), it often breaks through support or resistance lines sharply before the price reverses to form the right shoulder, which does not follow the previous trend's symmetry.

### Theoretical Understanding: The QM Pattern Through the Lens of the Stars

The Dow Theory ( is fundamental in trend analysis, stating that trends continue until a clear signal of reversal appears. In an uptrend, the price will always make new highs )Higher High(, and in a downtrend, it will make new lows )Lower Low(.

The QM Pattern directly applies this theory. When the price begins to form a new low )Lower Low( before reversing to create a new high )Higher High(, it indicates that the downtrend is changing, leading to a trend reversal to an uptrend. Conversely, when the QM Pattern appears in an uptrend, it signals a potential shift to a downtrend.

) Two Main Types of QM Pattern

**Bullish QM Pattern ###Uptrend QM Pattern(**

This pattern occurs when a downtrend is about to end. The price repeatedly makes lows )Lower Low( following the downtrend principle. Then, a strong rebound occurs, breaking through previous high levels )Make Higher High(. The price then retraces but the new low does not go below the left shoulder's low )Make Higher Low(. When the price tests the old support and decides to climb above the previous high, a clear trend reversal from downtrend to uptrend is confirmed.

**Bearish QM Pattern )Downtrend QM Pattern(**

This pattern appears when an uptrend is nearing its end. The price creates new highs )Higher High( in sequence. Then, a sharp pullback occurs, breaking below previous lows )Make Lower Low(. The price rebounds but the new high does not surpass the left shoulder's high )Make Lower High(. When the price touches the old resistance and fails to break it, then moves downward, it confirms a shift from an uptrend to a downtrend.

) How to Trade QM Pattern Using Demand and Supply Zones

Demand Supply Zones refer to price areas with strong buying ###Demand Zone( (support) or strong selling )Supply Zone( (resistance). Combining these zones with the QM Pattern allows for more precise entry points )Entry Point(.

**For Bullish QM Pattern**

When the right shoulder forms and a new high is created, then the price begins to decline, look for a Demand Zone at the level of the left shoulder. This zone is an ideal entry point for a long position )Long Entry(. Place your stop loss )Stop Loss( below the head or previous low. The take profit )Take Profit( can be set higher, following the trend change.

**For Bearish QM Pattern**

When the right shoulder forms and a new low is made, then the price rebounds, look for a Supply Zone at the level of the left shoulder. This zone is suitable for a short entry )Short Entry(. Place your stop loss )Stop Loss### above the head or previous high. The take profit (Take Profit) can be left to follow the new trend direction.

( Important Warnings and Considerations When Using QM Pattern

Although the QM Pattern is a powerful tool, it has limitations. Especially when used with assets that have low trading volume )Low Liquidity###. In such cases, the price may form patterns that resemble the QM Pattern, but due to trading being driven by a few players, the actual pattern may deviate from expectations. Always check the trading volume (Volume) before applying this pattern.

Summary

The QM Pattern is not just a random chart pattern but is supported by the Dow Theory and supply-demand principles. Remember that the QM Pattern arises from the asymmetry of the Head and Shoulders pattern, named after the hunchback character. If you are a trend-following trader Trend Following, carefully monitor trading volume and combine the QM Pattern with Demand and Supply Zones. This tool can help you effectively identify trend reversals.