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N pattern trading: the impulse, pullback and continuation leg

N pattern trading explained: measure the impulse, pullback and continuation leg, with entry and stop ideas for study, and how to draw it in SuperCharting.

N pattern trading is built on a simple three-leg shape: a strong move (the impulse), a pause or pullback against it, and then a second move in the original direction (the continuation leg). Drawn on a chart the path looks like the letter N in an uptrend, or an upside-down N in a downtrend. Traders measure the first leg, wait for the pullback to stop, and then study whether the next leg is likely to be about as long as the first. This page explains the shape, the measurements, some entry and stop ideas for study, and how to draw the pattern with SuperCharting's tools.

This page is education about how traders read charts, not a recommendation to buy or sell.

The four points of an N

Label the swing points A, B, C and D, in an uptrend:

• A is the swing low where the impulse starts.
• B is the swing high where the impulse ends.
• C is the pullback low. In a valid up N it stays above A.
• D is where the continuation leg ends. It does not exist yet while you are trading the pattern; you project it.

The first leg is A to B, the pullback is B to C, and the continuation is C to D. This is the same four-point shape that many traders call an ABCD pattern, and the N is the version drawn in the direction of a trend. A downtrend N is the mirror image: A is a swing high, B a swing low, C a lower high.

How traders measure it

Three measurements do most of the work.

1. Leg length. AB is the distance from A to B, in points or in percent. Example: NSE:NIFTY rises from 24,000 (A) to 24,400 (B) on a 15-minute chart, so AB is 400 points.

2. Pullback depth. Divide the pullback by the first leg: BC / AB. If NIFTY falls back from 24,400 to 24,200 (C), the pullback is 200 points, or 50% of AB. Many traders watch the 38.2% to 61.8% zone, the usual Fibonacci retracement levels. A shallow pullback (under 38%) is often read as a strong trend; a pullback deeper than 61.8% makes some traders doubt the pattern, and a close beyond A cancels it.

3. Projection. The simplest target is the equal-leg projection: D = C + AB. Here that is 24,200 + 400 = 24,600. Some also use 1.618 times AB (24,847) as an extended target. These are conventions, not laws; price often stops short, overshoots or reverses.

Some traders also compare time: an impulse of 20 bars suggests a continuation of roughly 20 bars. That is a rough guide only.

Entry and stop ideas, for study

How you enter decides what the numbers look like. Continuing the NIFTY example (A 24,000, B 24,400, C 24,200, target 24,600):

The table shows why traders argue about N entries. Entering near C offers a small risk against a large projected move, but you have to act before the pullback is confirmed, and a stop just under C is hit more often. Waiting for the break of B gives more confirmation, but most of the projected move may be gone and the stop is far away. Neither is better in general; do this arithmetic before the trade, with your own numbers.

Common stop placements for study are just beyond C, beyond A, or a multiple of the average true range beyond C. A common invalidation rule is that the pattern is wrong if price closes beyond A. Gaps can jump a stop, so a stop level is not a guaranteed exit price.

How to draw an N pattern in SuperCharting

1. Open a chart, for example NSE:NIFTY on 15 minutes, and scroll to a rise followed by a pullback.
2. Optionally add the Zigzag indicator from Indicators (its defaults are 5% price deviation and 10 pivot legs; lower the deviation to about 0.5 on an intraday chart) to see the swing points the script finds.
3. On the left toolbar open Patterns and choose ABCD pattern. Click A, B, C and then your estimate of D. The tool labels the four points and writes two ratios on the dashed links: BC / AB on the first and CD / BC on the second.
4. Open Gann and Fibonacci tools and choose Fib retracement. Click A, then B. The levels fall below B, so you can see which one C touched.
5. Choose Trend-based fib extension and click A, B and then C. The levels are drawn from C, so the 1 level is the equal-leg target and 1.618 the extended one.
6. Choose Long position from Forecasting and measurement tools, click your entry and then the target. The tool shades the target and a stop at half that distance; for a different stop, use Measure from entry to your stop level to read the points. See drawing tools and Fibonacci tools.
7. Select a drawing and click Add Alert on its floating toolbar to be told when price reaches a level.

For a downtrend N, start at a swing high and use Short position.

A script that marks the equal-leg target

This indicator finds the last low, high and higher low with pivots and plots the equal-leg projection for an up N. It is a study aid, and pivots are only confirmed after the chosen number of bars, so it shows the pattern late:

//@version=6
indicator("N pattern leg projection", overlay=true)
len = input.int(5, "Pivot bars each side", minval=1)
ph = ta.pivothigh(high, len, len)
pl = ta.pivotlow(low, len, len)
var float prevLow = na
var float lastHigh = na
var float lastLow = na
var int prevLowBar = na
var int highBar = na
var int lowBar = na
if not na(ph)
    lastHigh := ph
    highBar := bar_index - len
if not na(pl)
    prevLow := lastLow
    prevLowBar := lowBar
    lastLow := pl
    lowBar := bar_index - len
validUp = not na(prevLow) and prevLowBar < highBar and highBar < lowBar and lastLow > prevLow and lastLow < lastHigh
target = validUp ? lastLow + (lastHigh - prevLow) : na
plot(target, "Equal-leg target", color=color.green, style=plot.style_linebr)
plotshape(not na(pl) and validUp, "C", style=shape.triangleup, location=location.belowbar, color=color.green, offset=-len)

Paste it into the Script Editor (Ctrl + E) and click Add to chart. Pivot bars each side sets how big a swing must be.

Testing the idea before you trust it

Do not judge N patterns from a few examples that look good in hindsight. Two safer habits:

• Practise in Bar Replay: pick a past day, hide the future and mark A, B and C only when they would have been visible. Record where price actually went.
• If you turn the rules into a script, run it through the Strategy Tester with commission and slippage, and read the backtesting guide first. Past results do not guarantee future results.

Frequently asked questions

Is the N pattern the same as ABCD?

They are closely related. The N pattern is the ABCD shape drawn with the trend: an impulse, a pullback and a continuation. The ABCD tool in SuperCharting draws the four points, and you decide whether the shape fits your N rules.

How deep can the pullback be?

Many traders use 38.2% to 61.8% of the first leg as the zone of interest, and treat a close beyond the start of the first leg as a failed pattern. These are conventions to test, not fixed rules.

Does the continuation leg always equal the first leg?

No. The equal-leg projection is a common first target, and price often falls short of it or runs past it. Treat it as a reference level.

Which timeframe works best?

The shape appears on every timeframe: small charts show more patterns and more noise, large ones fewer and cleaner. Test on the timeframe you trade.