Forex Strategies Resources

8# Bat Pattern Trading Forex System

Submit by joy22

 

Time Frame: 15 min, min, 60min, 240 min.

Pairs: all

Indicators:

Zup 80;

Money Flow index.

 

Bat Patterns

The Bat pattern is a harmonic pattern that was discovered by Scott Carney in 2001. Check out the following image:

The Bat pattern is in the same family of Gartley's 5-point corrective patterns, but has distinct harmonic ratios. The Bat pattern incorporates a precise harmonic ratio (0.886 of XA swing). It also demands that the B (center) retracement should be less than 0.618 of XA swing. 

 

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The B retracement differentiates between the Gartley and Bat patterns. The Gartley pattern must have a 61.8% retracement of XA swing, and in Bat patterns have the same XA swing retracement below 61.8% at "B".

The Bat pattern's Potential Reversal Zone (PRZ) is defined by 1.27AB=CD pattern, 1.62BC, 0.886 XA retracement levels. In bullish or bearish Bat patterns, a reversal from PRZ is anticipated for a potential long and short entry trades.


Trading the Bat Pattern Once the Bat pattern is completed, wait for a higher-high bar or wide range bar to give a signal to enter a long trade. Enter a "long" trade one tick above the high of the confirmation (higher-high or wide range) bar. For bearish patterns, enter a "short" trade one tick below the low of the lower-low or wide-range bar.

Setting Targets Targets for Bat patterns are similar to the Gartley patterns. First targets may be set at the A level or 1.27 of the XA swing. The secondary targets could be 1.62 to 2.0 of the XA swing level.


Stop Losses

The Bat pattern fails if price trades below the X level. Place a stop order one tick below X level.

You do not need to know how to identify or draw these patterns on your chart in order to use them as the custom indicator we will be using will draw these patterns for us. It's still good to know about the most important characteristics of these patterns:

The pattern incorporates the 0.886XA retracement, as the defining element in the Potential Reversal Zone (PRZ).

The B point retracement must be less than a 0.618, preferably a 0.50 or 0.382 of the XA leg. The Bat utilizes a minimum 1.618BC projection. The AB=CD pattern within the Bat is extended and usually requires a 1.27AB=CD calculation.

It is an incredibly accurate pattern and requires a smaller stop loss than most patterns.

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