The Bat pattern is a popular harmonic pattern. It looks similar to the Gartley pattern. But uses different Fibonacci ratios.
The most distinctive feature of this pattern is that point B doesn’t reach 50% Fibonacci retracement of the XA leg.
And secondly, this particular pattern represents a deep retest of support / resistance. After that, a sharp reversal may happen.
Figure 1: Bullish Bat Pattern
Bat Pattern Rules
Point B of a typical Bat pattern ranges from 0.382 to 0.50 retracement of the XA swing.
BC= 38.2% to 88.6% Fibonacci retracement of the AB leg.
CD= 88.6% Fibonacci retracement of the XA leg.
And CD must also represent 1.618 – 2.618 Fibonacci extension of the AB leg.
Figure 2: Bearish Bat Pattern
Bearish Bat Pattern – Short Trade Setup
In the examples below, I’m gonna use our own proprietary Harmonic Dashboard indicator that does all the hard work for you and identifies valid Crab patterns that follow the correct Fibonacci ratios.
In the photo below, notice that point D of this bearish pattern reaches the maximum Fibonacci ratio of 0.886 of the XA leg.
The optimal target for this trade is the 61.8% Fibonacci retracement of the CD leg.
Bullish Bat Pattern – Long Trade Setup
In this example, notice that point D of this bullish pattern approaches the 0.882 Fibonacci retracement of XA leg. But it’s still good enough to call it a Bat.
We can trail our stop loss just below the Fibonacci ratios if you want to stay in the trade for as long as possible, and to protect yourself in case of a reversal.
Again, you can notice one of the primary characteristics of the Bat pattern which is a smooth trend reversal once point D is established.