The Bullish Bat and Bearish Bat are harmonic patterns used in technical analysis to predict potential reversals in the market. These patterns are part of the family of harmonic patterns, which are based on Fibonacci retracement and extension levels.
Bullish Bat Harmonic Pattern
Definition:
it is a reversal pattern that indicates a potential bullish reversal after a downtrend. It is characterized by specific Fibonacci retracement and extension levels
Characteristics:
1. Point X to A: The initial move (X to A) is a significant downtrend.
2. Point A to B: The price retraces to point B, which is typically a 38.2% to 50% retracement of the XA leg.
3. Point B to C: The price moves down again, but not as low as point A. Point C is typically a 38.2% to 88.6% retracement of the AB leg.
4. Point C to D: The price moves up again, forming the final leg of the pattern. Point D is typically a 161.8% to 261.8% extension of the BC leg and a 88.6% retracement of the XA leg.
Entry:
Traders typically look to enter a long position at point D, with a stop-loss just below this point. The target is usually set at the 38.2% or 50% retracement of the AD leg.
Bearish Bat Harmonic Pattern
Definition:It is a reversal pattern that indicates a potential bearish reversal after an uptrend. It is the inverse of the Bullish Bat pattern.
Characteristics:
1. Point X to A: The initial move (X to A) is a significant uptrend.
2. Point A to B: The price retraces to point B, which is typically a 38.2% to 50% retracement of the XA leg.
3. Point B to C: The price moves up again, but not as high as point A. Point C is typically a 38.2% to 88.6% retracement of the AB leg.
4. Point C to D: The price moves down again, forming the final leg of the pattern.Point D is typically a 161.8% to 261.8% extension of the BC leg and a 88.6% retracement of the XA leg.
Entry:
Traders typically look to enter a short position at point D,with a stop-loss just above this point.The target is usually set at the 38.2% or 50% retracement of the AD leg.
