The BAT Harmonic Pattern
-A
Forex Trader’s Perspective-
As explained in our introduction to
Harmonic Patterns, the Gartley and Butterfly, Harmonic Pattern enable the
trader to determine turning points with precision 80% of the time - according
to expert traders.
As is the case with all Harmonic patterns, the BAT harmonic pattern has five points - namely, “XABCD”.
The market will always provide points “XA”, which is the impulse move and the longest leg in this pattern. And as usual, the
trader is required to find the remaining “BCD” points.
Therefore using the Fibonacci-retracement
levels, the trader is required to identify BCD points, guided by the following
measurement Criteria: -
>Point ‘B’ is 38.2 to 50.0
retracement of leg “XA”.
>Point ‘C’ is between 38.2 and
88.6 retracement of leg “AB”.
>Point ‘D’ is 88.6 retracement of
leg “XA”
It is important to note that; Point
“D” is also referred to as; Potential
Reversal Zone (PRZ).
On placing Stop Loss (SL), Bat Harmonic pattern rule recommends that; SL
should be placed a few pips below point ‘X’.
As for Take Profit (TP), it is
recommended that:
The first TP should be placed at point
38.2.
The second TP should be placed at point
61.8.
NB:
§ All legs of the BAT harmonic pattern should complete within the
measurements provided.
For
instance, ‘AB’ leg should not retrace beyond point ‘X’. If it does, then the
pattern is no longer valid as a BAT Harmonic pattern.
§ The Bat Harmonic Pattern
is a retracement and continuation pattern, which means; it forms when market
trend temporarily reverses then continue on its original direction.
§ The retracement (temporary trend-reversal) enables a trader
to enter the market and take trades at good/lower price before the trend
continues on its original bullish or bearish direction.
§
It is extremely vital that a Trader knows:
-At
What point to Enter,
-Where to place a Stop loss and –
-When to Take profit.
OJ
Mwale – Sani Global Forex
Images: Courtesy of BabyPips &
TradingStrategyGuides
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