## How exactly can QM Pattern make money? First, understand this "humpback" chart

Many traders have heard of Head and Shoulders, but mentioning QM Pattern often leaves people confused. Actually, QM (Quasimodo Pattern) is a variation of the Head and Shoulders, but this variation looks particularly distinctive—the right shoulder is noticeably higher or lower than the left shoulder, giving it a humpback appearance, which is where its name comes from. Recently, this pattern has gained popularity in trading circles because it can provide early warning signals of trend reversals.

## Why is it called QM?

Quasimodo is the main character in the literary work "The Hunchback of Notre-Dame," known for his humped back. The graphical feature of the QM Pattern is: although it resembles a head and shoulders shape, the position of the right shoulder is abnormal—higher or lower than the left shoulder. Because of this "asymmetrical" and peculiar shape, traders use this name to describe it.

Graphically, QM forms an M or W shape, composed of three key swings. The key difference is: after the head forms, the subsequent correction will sharply break through the original neckline, then form that "tilted" right shoulder. During this process, trend signals will gradually become apparent.

## QM appears in two directions

**Bullish Signal (Bullish QM Pattern):** Appears at the critical point where a downtrend is about to reverse upward. You will see the price continuously making new lows (Lower Low), indicating persistent selling pressure. But suddenly, the price rebounds strongly, breaking previous highs to create a Higher High. This breaks the continuity of the downtrend. Then the price pulls back, but this time the low point (Higher Low) is higher than the previous low—signaling the start of an uptrend.

**Bearish Signal (Bearish QM Pattern):** Conversely, appears when an uptrend is about to reverse downward. The price makes a Higher High confirming the uptrend, then suddenly plunges through the previous low to create a Lower Low, then rebounds but fails to reach the height of the left shoulder, forming a Lower High. At this point, the downtrend is officially confirmed.

## How does Dow Theory interpret QM?

The formation logic of QM perfectly aligns with Dow Theory. The core idea of this theory is: trends will continue until a reversal signal appears.

In an uptrend, prices keep making Higher Highs and Higher Lows; in a downtrend, they make Lower Lows and Lower Highs. QM forms when this process of "making new lows or highs" is broken—that is, when the trend begins to fail.

Taking Bullish QM as an example: first, the Lower Low confirms the downtrend; then the Higher High breaks the continuity of the decline; finally, the Higher Low signals the arrival of an uptrend. The entire process reflects the shift in buying and selling forces.

## Use Demand and Supply Zones to trade QM precisely

To profit from QM, the key is to identify Demand Zones and Supply Zones.

**Bullish QM trading plan:** When the right shoulder forms, the price will break upward to a new high, then retrace to a support level not lower than the left shoulder. This support level is the Demand Zone. Traders buy here, with stop-loss set at the head or previous lowest point, and take profit while waiting for trend reversal signals.

**Bearish QM trading plan:** After the right shoulder forms, the price makes a new low, then rebounds to touch a resistance level not higher than the left shoulder. This resistance level is the Supply Zone. Traders short here, with stop-loss at the head or previous highest point, and take profit while waiting for trend reversal.

## Be cautious of these pitfalls when using QM

The biggest weakness of the QM Pattern is that it can be easily mistaken. Especially in assets with low trading volume, it might just be a manipulation by a few large players, creating a pattern that looks like QM but ultimately fails. Therefore, before applying QM, always check if the asset has sufficient trading volume to ensure that what you see truly reflects the overall market strength, not just a few individuals' manipulation.

## Summary

Although the QM Pattern may sound unfamiliar, once you understand its "humpback" feature and formation mechanism, you can use it as an effective tool to identify trend reversals. It not only has clear graphical features but is also supported by Dow Theory and supply-demand principles, making its accuracy quite good. But remember: before using QM to develop a trading plan, confirm the trading volume and market liquidity to ensure what you see is a genuine signal, not a false pattern.