The Bat pattern was discovered by Scott Carney in 2001. Carney maintains it is one of the most accurate patterns, and requires a smaller stop loss than most other patterns.
This is one of the retracement patterns (along with the Gartley Pattern) - and is a deep retest of Support (in the case of a bullish Bat) or Resistance (for a bearish bat) around the X level. The D level reversal will be at the .886 XA retracement in the PRZ.
If a Bat fails - it can often "morph" into a Crab Pattern where the D point exceeds the X point.
This pattern usually has an extended CD leg which is 1.27 Fibonacci extension of the AB - providing a favourable risk/reward.
Systematic tests by FxGroundworks, have shown the Bat pattern success rates to be 89%-95%.
Key features to look out for are:
Get Started with Harmonics. After you've browsed through these pages and got to know more about harmonic trading, you'll probably feel like giving them a try. Just go to "Get Started with Harmonics" for a step-by-step guide. It tells you precisely what to do - and how to do it, so you don't waste any time setting up and getting started.
Example Bat Pattern - EUR-AUD H1
In this example, price reversed at the .886 of the XA leg precisely.
Scaling into the trade will ensure all the Fibonacci levels are tested in the PRZ. Once price has tested all the Fib levels in the PRZ, you can often expect a fast reversal, as happened in this example.
Put your Stop just above the 0.886 retracement level of the XA, for a minimum risk trade. In the example trade above, that would have worked out perfectly.
Alternatively you could place your stops above the X level, if your risk management rules permit. Above the X point will usually be a strong Support zone (for a bullish Bat) or strong Resistance zone (for a bearish Bat) - being top of a range.
I trade harmonic patterns in conjunction with strong Support and Resistance levels - and so I would look out for Bat patterns to develop near the top or bottom of a range of a higher timeframe like the H1 or H4 - since that would offer a higher probability.
I recommend the following pages for further details on harmonic patterns.
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Further Reading
Good Books for Harmonic Traders