Hi Traders,
Here is a bearish bat pattern setup on USDJPY with D pattern completion at 103.950.
Read below if you are unsure how to identify a bat pattern.
1) Look for an impulse leg, which will mark the beginning of the pattern. I like the analogy of seeing the impulse leg as a "Sore Thumb" high or low point, something that immediately sticks out on the chart. This is the X point.
2) Grab your fibonacci retracement tool and draw from the X (sore thumb high or low) to the lowest/highest point of the move. This is the A point.
3) Price must touch the 50% retracement of the XA leg, BUT NOT TOUCH the 61.8%. This is the B point.
4) Draw a fibonacci retracement from the A to B point, we are looking for AT LEAST a 61.8% retracement. If price exceeds the A point the pattern is invalid. This is the C point.
5) To find the completion at D, draw a fibonacci retracement from XA and if price reaches the 88.6% retracement the pattern has completed. This is the D point.
6) I place stops 10-15 pips above or below the X leg.
7) Targets go at the 38.2% and 61.8% retracement of the A to D leg.
Hope that helps! Remember to leave me a like or comment below if this helped you.
Good luck and good trading,
Luke
Here is a bearish bat pattern setup on USDJPY with D pattern completion at 103.950.
Read below if you are unsure how to identify a bat pattern.
1) Look for an impulse leg, which will mark the beginning of the pattern. I like the analogy of seeing the impulse leg as a "Sore Thumb" high or low point, something that immediately sticks out on the chart. This is the X point.
2) Grab your fibonacci retracement tool and draw from the X (sore thumb high or low) to the lowest/highest point of the move. This is the A point.
3) Price must touch the 50% retracement of the XA leg, BUT NOT TOUCH the 61.8%. This is the B point.
4) Draw a fibonacci retracement from the A to B point, we are looking for AT LEAST a 61.8% retracement. If price exceeds the A point the pattern is invalid. This is the C point.
5) To find the completion at D, draw a fibonacci retracement from XA and if price reaches the 88.6% retracement the pattern has completed. This is the D point.
6) I place stops 10-15 pips above or below the X leg.
7) Targets go at the 38.2% and 61.8% retracement of the A to D leg.
Hope that helps! Remember to leave me a like or comment below if this helped you.
Good luck and good trading,
Luke