## Quasimodo: Advanced Chart Pattern for Trend Traders

Experienced investors and traders are often proficient in various chart patterns. However, when it comes to the QM Pattern or Quasimodo Pattern, many may find it unfamiliar because this pattern is relatively new in technical trading and not as widespread as Head and Shoulders.

The name "Quasimodo" comes from the character in the classic novel The Hunchback of Notre-Dame, because this pattern displays an asymmetrical price movement resembling the figure of that character. The distinctive feature of the Quasimodo Pattern is that the shoulders (shoulders) are uneven, with the right shoulder being higher or lower than the left shoulder in an abnormal way.

## Structure and Characteristics of the QM Pattern

The QM Pattern consists of three swing points similar to the Head and Shoulders pattern but differs at the critical point. When the (Head) forms, the price will break through the neckline sharply before reversing to form the right shoulder, which does not exceed the boundary of the left shoulder. This step is a key signal indicating that the price trend is about to change direction.

In terms of appearance, the Quasimodo Pattern typically forms an M or W shape, depending on whether it signals a reversal upward or downward. The formation of the QM Pattern often occurs at the end of a trend, whether a downtrend turning into an uptrend or an uptrend reversing into a downtrend.

## Underlying Mechanism: Star Theory and Demand-Supply Dynamics

From the perspective of (Dow Theory), which underpins trend trading, prices will continue to make Higher Highs in an uptrend and Lower Lows in a downtrend until a change signal occurs.

The QM Pattern clearly demonstrates this change. In the case of a Bullish QM, the price makes a Lower Low to confirm the previous downtrend, then rebounds to make a Higher High, breaking the downtrend pattern. Subsequently, the price tests the support level, forming a Higher Low, indicating that an uptrend is beginning.

In the case of a Bearish QM, the pattern works oppositely. The price makes a Higher High to confirm the previous uptrend, then drops sharply to make a Lower Low, before rebounding to form a Lower High, indicating that the downtrend is starting to turn.

The trading dynamics at that moment reflect a balance between buying and selling forces (Demand Supply), creating conflicting signals and decreasing trading volume, which leads to a clear turning point.

## Types of Quasimodo Pattern

**Bullish QM Pattern** occurs when a downtrend is ending. The price makes a Lower Low confirming previous selling pressure, then reverses sharply, breaking through the resistance that previously made a Higher High, but cannot sustain above it, leading to a correction. However, the price does not fall below the left shoulder. When the price reverses and breaks the Higher High again, the uptrend truly begins.

**Bearish QM Pattern** occurs when an uptrend is ending. The price makes a Higher High confirming previous buying pressure, then drops sharply, breaking through the support that previously made a Lower Low, but then rises again, not exceeding the left shoulder. When the price reverses and breaks the Lower Low again, the downtrend is confirmed.

## Applying the QM Pattern with Demand Supply Zones in Trading

Combining the QM Pattern with Demand Supply Zones is an effective strategy for trend traders.

For **Bullish Quasimodo**, the trading process begins when the right shoulder starts forming. The price makes a Higher High, then pulls back. When the price tests the Demand Zone at the level of the left shoulder, this is the entry point. Stop-loss is placed at the head or the lowest point previously made. The exit point is set when the trend changes.

For **Bearish Quasimodo**, the right shoulder forms with a Lower Low, then rebounds. When the price tests the Supply Zone at the level of the left shoulder, this is the short entry point. Stop-loss is placed at the head or the highest point previously made. The exit point is set when the trend changes.

## Cautions and Limitations of Using the QM Pattern

As a technical analysis tool, the QM Pattern has limitations. The main concern is its application to assets with low trading volume. In such cases, a pattern resembling a QM Pattern may form, but ultimately the price is driven by the trading activity of a small group of players, which can lead to misleading results.

Therefore, before applying the Quasimodo Pattern, it is essential to verify the trading volume of the asset to ensure that the analysis is based on a chart with sufficient liquidity.

## Summary

The QM Pattern or Quasimodo Pattern is a valuable chart pattern for identifying trend reversals. Its name reflects the asymmetrical shape, resembling a hunchback, but the QM Pattern is more than just a typical price pattern.

It is supported by the star theory and reflects changes in demand-supply dynamics in the market, which enhances its accuracy—especially when used in conjunction with Demand Supply Zones within a trading strategy.

For trend-following enthusiasts (Trend Following), the QM Pattern is another tool to add to their analysis arsenal, helping to find better entry points and manage risk effectively.