Bullish Bat harmonic pattern
- With the bullish Bat pattern, it looks like a stretched-out “M”.
- The price rises, forming an X-to-A leg higher, then pulls back, retracing less than 0.618 of XA. Here, the ideal retracement is 0.382 to 0.50.
- Then there is another move up as shown by “BC”, which retraces 0.382 to 0.886 of wave AB.
- This is followed by a further down wave called CD, which is a 1.618 to 2.618 extension of BC.
- Point D should be near a 0.886 retracement of XA.
- The price is expected to rally from this potential reversal zone.
Bearish Bat harmonic pattern
- The bearish Bat harmonic pattern looks like a stretched-out “W”.
- The ratios are the same, except the pattern starts with a price decline from X to A.
- AB is a move higher, BC is a move lower and CD is a wave higher.
- Point D represents where traders will watch for a decline in price, which explains why it is a bearish pattern.
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