How to identify The animal patterns (butterfly, crab & bat)

1. The Butterfly pattern

It starts with uptrend or downtrend which comes to exhaustion and draws zigzag like corrective movements.  It is a trend reversal pattern.The butterfly is similar to the Gartley pattern but has 78.6% as XB

Typical features of Butterfly pattern

Let’s start with the illustration below;

  • Move AB should be 78.6% retracement of move XA.
  • Move BC can either be 38.2% or 88.6% retracement of AB. 
  • If BC is 88.6% of AB, CD should extend 161.8% .
  • If BC moves 38.2% of AB, then CD should extend 127.2% of BC.
  • CD should be 127.2% or 161.8% retracement of XA.

How to trade a butterfly on a price chart 

Take a look at the chart below with a bearish butterfly with its typical features as we mentioned above

From our example above, Sell trigger entry is at D. The stop loss is placed few pips above the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

Now, let’s take look at the Bullish Butterfly pattern;

Take a look at the price chart below;

From our example above, the Buy entry signal is at D. The stop loss is placed few pips below the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

2. The Crab pattern.

It has the best risk/reward ratio among all of the Harmonic Patterns. Just like the butterfly pattern, it is also a trend reversal pattern. This pattern was developed by Scot Carney and was named so because the bullish version of it looks like walking crab.

Let’s start with the typical characteristics;

First take a look at the illustration below;

  

  • Move AB  should be 38.2% or 61.8% retracement of XA.
  • Move BC should be 38.2% or 88.6% retracement of  AB.
  • If the retracement BC  is 38.2%, then the CD must move 224% of BC.
  • If BC is 88.6%, then the CD should be 361.8%  of BC.
  • Move CD should be 161.8% retracement of XA

How to trade a Crab pattern on a price chart

Let’s start with an example below with a Bearish Crab pattern

From our example above, Sell trigger entry is at D. The stop loss is placed few pips above the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

Now, take a look at the chart below with a Bullish Crab pattern

From our example above, the Buy entry signal is at D. The stop loss is placed few pips below the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

3. The Bat pattern

It is a trend continuation pattern. It was also also developed by Scot Carney and was named so because it resembles the bat wings. It occurs more frequently than most of the other harmonic patterns. It also has a good risk reward ratio making it also a favorite for most traders.

Let’s start by discussing its typical features/characteristics

Take a  look at the illustration below;

  • Move AB  should be 38.2% or 50.0% retracement of XA.
  • Move BC should be 38.2% or 88.6% retracement of an AB.
  • If the retracement BC is 38.2% of AB, then the CD must move 161.8% of BC.
  • If BC is 88.6%, then the CD should be 261.8%  extension of BC.
  • CD should be 88.6% retracement of XA

How to trade a Bat pattern on a market price chart

Let’s start with the example below with a Bearish Bat pattern.

From our example above, Sell trigger entry is at D. The stop loss is placed few pips above the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

Next, let’s see how to trade a Bullish Bat.  First take a look at the price chart below with Bullish Bat pattern;

From our example above, the Buy entry signal is at D. The stop loss is placed few pips below the farthest possible D level. The safe target lies within 38.2-61.8% of AD move. The most important point to ensure is to have a favorable risk reward ratio.

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