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Harmonic Bat Pattern Strategy
The Bat Harmonic pattern draws similarity with the Cypher pattern, but it uses different Fibonacci levels. A quick way to differentiate the Bat pattern from that of the Cypher structure is Point B which when it does not exceed the 50 percent Fibonacci retracement level of XA leg is considered to be a Bat Harmonic pattern. The Bat trading pattern suits all the market time frames and different trading markets. However, as a trader you must remember that using the Bat pattern on time frames that are lower can be quite challenging. This is because this particular pattern often shows up less frequently on time frames that are low.
Trading the Bat Pattern
The Bat harmonic pattern must fulfill the below mentioned Fibonacci rules:
- AB=should be minimum 38.2 percent as well as maximum 50 percent Fibonacci retracement of the XA.
- BC=Must be minimum 38.2 percent as well as maximum 88.6 percent Fibonacci retracement of the AB.
- CD=should be 88.6 percent Fibonacci retracement of the XA or in the range of 1.618 percent- 2.618 percent Fibonacci extension of the AB.
Traders looking to use the Bat pattern strategy must back test the same before using it for advanced trading. Once the trader has drawn the Bat Harmonic pattern on the chart, he/she must enter at 88.6 percent Fibonacci retracement level, which is an exact market changing point. This is because at 88.6 percent Fibonacci level, traders enjoy a much better risk to reward ratio.
Next, traders must focus on placing their stop loss order. Ideally, they should place their stop loss right below the X point of the bat pattern. This is because a break under that level invalidates the pattern automatically. Finally, it is important to determine the exact position for taking profits. In the case of Bat pattern, traders must adopt numerous TP (or Take Profit) Strategy. Accordingly, the first profit should be place at C-level and the remaining after there is break above the A-wave.