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Bullish Bat

GBPUSD - Type2 Bullish BatA Type 2 Bullish Bat Pattern completed at 1.3420. Why is it important to know if it is a Type1 pattern or a Type2 pattern? Well, a Type 2 pattern simply means that the Harmonic Pattern has reached Target1(at the minimum), this means that some of the traders who were on it, has already got off the ride, lesser traders in that direction means weaker movement. You have to be able to accept that the movement might be slower than the Type1 setup and the movement may even go against you. Of courses there are other indications that would suggest if it is a good idea to engage it and I've used those filters, all is left to do is a candle confirmation at the completion price. If the market reverse from the current price, we could expect a Bearish Deep Gartley Pattern complete at 1.3503. This is also a Great Zone to short the market because the Price Action Traders may hop on the bandwagon and the structure trader may head in for a short at the Resistance as well.
Short
by RaynLim
3
Bat Harmonic Pattern - Advanced AnalysisIn this series of chart patterns, we have taken a look at the more traditional ones. However, we have not yet discussed harmonic patterns. Harmonic patterns form a part of the numerous chart patterns available for the identification of reversal points. The practice of trading using harmonic patterns is often defined as "Harmonic Trading". We felt like it was an appropriate time to discuss the popular bat harmonic pattern, defined as "The most accurate pattern in the entire harmonic trading arsenal" by Scott M. Carney (1). "Suspicions in thoughts are like bats among birds." - Translated from Francis Bacon. 1. Introduction Unlike most traditional chart patterns, these patterns do not require breakouts of the price to be traded and involve the usage of precise Fibonacci ratios (highlighted below) for the identification of harmonic patterns. This makes harmonic patterns less subjective and pretty spooky. Wow. 1.1 Fibonacci Ratios Fibonacci ratios are key components of harmonic patterns. Fibonacci ratios are obtained from the Fibonacci sequence, whose n th element is obtained by adding the two previous numbers of the sequence, that is: Fib(n) = Fib(n-1) + Fib(n-2) The sequence is as follows: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233..., and exhibits various characteristics. One characteristic of interest is given by the ratios between elements in the sequence. The ratio of one element in the sequence with the following one approximately equals 0.618, while the ratio of one element in the sequence with the previous one approximately equals 1.618. These two values are often defined as golden ratios, with 1.618 being denoted as "Phi" (upper-case P) and 0.618 as "phi" (lower-case p). The ratio between elements separated by two positions returns 0.382 and 2.618 respectively, calculating the ratio using a higher separation would return the series of Fibonacci ratios. These ratios are also given by raising the golden number with specific exponents. 0.618^4 = 0.146 0.618^3 = 0.236 0.618^2 = 0.382 0.618^0.5 = 0.786 0.618^0.25 = 0.886 0.618^0 = 1 The rationale behind the usage of Fibonacci ratios with harmonic patterns (and other methodologies in general) is given by the presence of the Fibonacci Sequence in nature and certain organisms and structures, but more importantly in human behavior. If security prices reflect investor behaviors, it seems logical to find a connection with Fibonacci numbers. This is a common rationale used by technical analysts to justify the usage of Fibonacci ratios. A few studies aimed to explain a potential connection between the Fibonacci sequence and financial markets and evidence obtained by Bhattacharya & Kumar provide further incisive research on this connection (2). 2. Harmonic Bat Patterns The bat harmonic pattern is built from 4 segments connecting points X, A, B, C, and D, each one located at a local maxima/minima of the price. The relative distance between the segments is used to determine the validity of a bat pattern; these rules are defined as follows: 1 - Segment AB retraces within 38.2% and 50% of the XA segment (some less strict conditions only require a retracement within 38.2% and 61.8%). 2 - Segment BC retraces within 38.2% and 88.6% of the AB segment. 3 - Segment CD retraces within 161.8% and 261.8% of the segment BC. 4 - Segment AD is approximately equal to 88.6% of segment XA. For the pattern to be valid, the vertex given by point C must be confirmed. It is also interesting to note that the bat pattern can possess an internal AB = CD pattern. A reversal is more likely to occur within the "potential reversal zone" (PRZ). Traders can have different methods for identification however Fibonacci retracements are commonly used, with an extremity of the PRZ located at 88.6% of the internal retracement of XA and another at 161.8% of BC. Another method identifies the PRZ within 78.6% and 100% of the internal retracement of XA. Some traders wait for additional confirmation before entering a position such as the occurrence of internal reversal patterns, oscillator divergences, or for the price to evolve outside the PRZ such that it implies that a reversal is occurring. 3. Stop Loss & Take Profits Various techniques exist to set take profits and stop-loss levels during the formation of a bat pattern. Some traders place the stop loss at or a few ticks below X, which can lead to reduced risk but a higher risk of a premature trigger of the stop-loss. The usage of a very tight stop loss is mentioned by Scott M. Carney. A take profit can be set at point A. Additional Fibonacci retracements might be used for partial exits. 4.Practical Examples Bearish Bat pattern on USDJPY15, we apply Fibonacci retracements to the segment XA and use the levels 0.5, 0.382, 0.236 as partial take profits while level 0 exits the entirety of a position. Bullish Bat pattern under completion on ERGOUSDT 4h, the price breaks the level situated at point B is a good sign for a potential of reach of the PRZ. 5. Observations Oscillator divergences occurring when the price is within the PRZ can be an additional confirmation of a potential reversal occurring. We found no studies proving data that the bat harmonic pattern is superior to other harmonic patterns. One study by Krzysztof Bednarz highlights the profitability of the bat pattern in a trading period of 27 days (3). Bulkowski shares statistics on how often price turns at point D (4). For Bullish Bats, the price reverses at point D 91% of the time, for Bearish Bat patterns the price reverses at point D 86% of the time. Super spooky... References (1) Carney, S. M. (2010). Harmonic Trading, Volume Two: Advanced Strategies for Profiting from the Natural Order of the Financial Markets. Pearson Education. (2) Bhattacharya, S., & Kumar, K. (2006). A computational exploration of the efficacy of Fibonacci Sequences in technical analysis and trading. Annals of Economics and Finance, 7(1), 185. (3) Bednarz, K. (2013). Taking investment decisions on the futures contracts market with the application of Bat harmonic pattern – the increased efficiency of investment. (4) Bulkowski, T. N. (2021). Encyclopedia of chart patterns. John Wiley & Sons.
BITSTAMP:BTCUSDEducation
by LuxAlgo
42
AUDUSD - Bullish BatIf you have the thought that NZDUSD and AUDUSD move exactly the same, this chart will prove you wrong. On the Daily chart, the candle has broken and closed above Point B, that increase the probability of the Bearish Bat Pattern completion. It is a dream of many Harmonic Pattern trader to buy at Point C and Sell at Point D. However, one shouldn't do that if one has not tested the setup or have a viable trading strategy to manage such trade. On the 1-hourly chart(right), there is a Bullish Bat Pattern setup within the buy zone. Having this pattern form and setup will not violate the Bearish Bat Pattern on its higher timeframe. I'm waiting to long on this Bat Pattern at 0.7400.
Long
by RaynLim
Ergo Batter UpSwing Trade Setup - Long ERG/USDT 4 Hr Entry: $9.240 Stop Loss: $7.745 Potential Loss: -16.18% Target 1: $18.347 Potential Profit: +98.56% Risk/Reward Ratio - 6.09:1 Target 2: $18.980 Potential Profit: +105.41% Risk/Reward Ratio - 6.52:1 Reasons to Take the Trade: - Bullish Bat Harmonic Pattern - Bitcoin has invalidated the Wyckoff Redistribution pattern and the 0.786 macro fib retracement, threatening a bullish move to $100,000 if the daily candle closes above the 786. Such price action will be a catalyst for altcoin movement upwards. - Triple Class A Hidden Bullish Divergence on both the 4 hour RSI and the MACD. Class A Hidden Bullish Divergence on the 1 Hour timescale as well. - RR Ratio is absurd. Just absolutely absurd. Reasons Not to Take the Trade: - If Bitcoin's bullish movement proves to be in fact too much hype, it may never come back down to hit the 0.886 of the XD measurement, and thus never hit the PCZ target for our entry. - You'll lose 16.18% of your position if this does end up being the short of the decade.
Long
by HeathHimself
1
GBPAUD - Another Bullish SharkHowever, this is my prefered bullish shark to engage and there are 2 reasons for that. 1. At this moment, the bearish movement is still strong, it seems like it can go a bit lower before any reversal happens 2. The Shark Pattern that forms at this level coincide with the completion of the Bullish Bat, or better known as Fib3 Bat or Alt Bat Pattern at the 4-hourly chart. 3. The current Shark Pattern is the last level of possibility for a buying opportunity. Shark Pattern can be a tricky and crafty one so if you are not familiar with it or do not have a coach who are well-versed with it, stay out of this pattern.
Long
by RaynLim
AUDCAD - Bearish CrabA bearish crab pattern may emerge and complete at 0.9240 for a shorting opportunity. On the other hand, traders who are looking at the 4-hourly chart might have a different view. A bullish bat pattern. This is why it is very important to follow your trade plan and stay out of the trade if you aren't certain. I'll be checking the candle formation on Monday morning for a 3-bar reversal for a buying opportunity within the Bullish Parallel Channel and I will observe how the market will react at Point D of the Crab Pattern.
Long
by RaynLim
1