Bat Pattern: Harmonic Trading Pattern
The Bat pattern closely resembles the Gartley pattern, which was developed by Scott Carney, but it follows different Fibonacci ratios. Many traders consider it one of the more precise harmonic patterns.
The Bat pattern is one of the more precise harmonic patterns. Scott Carney discovered it in 2001. It has several distinct elements that mark out a strong potential reversal zone.
The pattern typically represents a deep retest of support or resistance, which can often be quite sharp — a fast reversal from the Bat pattern is common.
The Bat pattern is also distinguished by containing an AB=CD pattern within it. It’s a precise pattern that calls for a tight stop-loss.
Identifying the Bat Pattern
The first thing to look for when identifying the Bat pattern (see the charts below) is the XA leg. You’re looking for a strong move up or down, depending on whether you have a bullish or bearish Bat structure.
The next requirement for the Bat structure is a Fibonacci retracement of at least 38% of the XA leg, which can extend up to 50% of the XA leg.
Next we look at the AB leg, which should retrace at least 38% of the Fibonacci ratios of the XA leg, but cannot exceed 88.6%. After that, the third point, C, falls between a minimum of 38% and a maximum of 88.6% of the AB leg.
The last thing we need to establish is point D. To find point D, all we do is locate the 0.886 Fibonacci ratio of the impulsive XA leg, which results in a deep CD leg and finally completes the whole Bat pattern structure.
A proper bullish Bat pattern must satisfy the following Fibonacci rules:
- AB = minimum 38.2% and maximum 50% Fibonacci of the XA leg.
- BC = minimum 38.2% and maximum 88.6% Fibonacci retracement of the AB leg.
- The D zone is an 88.6% Fibonacci retracement of the XA leg, or between 1.618% and 2.618% Fibonacci extension of the AB leg.
A proper bullish Bat pattern must satisfy the following Fibonacci rules:
- AB = minimum 38.2% and maximum 50% Fibonacci of the XA leg.
- BC = minimum 38.2% and maximum 88.6% Fibonacci retracement of the AB leg.
- The D zone is an 88.6% Fibonacci retracement of the XA leg, or between 1.618% and 2.618% Fibonacci extension of the AB leg.
Trading Strategy for the Bat Pattern
Enter at point D as usual — confirming a market reversal here is essential, such as with reversal candlesticks.
Taking Profit
Profit-taking can be set at 61.8% of the CD leg as a first target, and 127.2% of CD as a second target.
Stop-Loss
Set your stop-loss according to your own risk management rules — it’s usually placed below point X in the bullish pattern and above point X in the bearish pattern.
Finally, the Bat pattern is a harmonic trading pattern developed by Scott Carney, who wrote about it in his book series titled Harmonic Trading.
It’s one of several harmonic trading patterns that give traders a rules-based methodology, combining pattern recognition with Fibonacci analysis. The Bat pattern is similar to the Gartley pattern in its overall structure but differs in its measurements.
Read also: Harmonic Trading Definition
Read also: Butterfly Pattern — Identifying the End of a Trend Move
Read also: Crab Pattern
Read also: Shark Pattern
Read also: 0-5 Pattern
Read also: Fibonacci Ratios Explained
Read also: Divergence Explained Step by Step
Read also: Pros and Cons of Harmonic Patterns
Frequently Asked Questions
What are harmonic patterns in analysis?
Harmonic patterns are chart patterns that form part of a trading strategy. They can help traders read price direction by pointing to possible future market moves. They build geometric price patterns using Fibonacci numbers to flag potential price changes or trend reversals.
How many harmonic patterns are there?
The core harmonic patterns are 5-point patterns (Gartley, Butterfly, Crab, Bat, Shark, and Cypher). These patterns contain smaller 3-point (ABC) or 4-point (ABCD) patterns within them. All the price swings between these points are interconnected and follow harmonic ratios based on Fibonacci.
What is a harmonic pattern?
Harmonic price patterns take geometric price patterns a step further by using Fibonacci numbers to flag specific turning points. Unlike other, more common trading methods, harmonic trading attempts to anticipate future price movements.
What is the Bat pattern?
The Bat pattern is a corrective, continuation pattern that occurs when a trend temporarily reverses direction but then continues along its original path. It gives you a chance to enter the market at a good price right as the pattern finishes and the trend resumes, and it has both a bullish and a bearish version.
What are the measurements of the Bat pattern?
- The Bat is a harmonic trend-reversal pattern with specific Fibonacci ratios.
- The Bat pattern has five points and four price swings.
- When trading the harmonic Bat pattern, traders enter a position at point D.
- The stop-loss is placed below (or above, for the bearish Bat pattern) point X, and profit is taken at point A.
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