Bat Patterns are one of the more common harmonic patterns. They are similar to Gartley Patterns, except that the AB retracement can be anywhere less than the Fibonacci .618 of the XA leg and the AD leg completes at the .886.
Because the AB leg can be anything < .618, we have to be a little careful as we approach the .618. A reversal at .600, for instance, could be a Bat or a Gartley that came up a little short. So for those that are close enough to go either way, we’re cautious around the .786 (the Gartley completion) too.
Likewise, a presumed Bat pattern that is approaching the .786 on its CD leg can throw us a curve and put in a bigger reversal there than at the .618. If this happens, there’s a pretty good chance we need to move the Point B to the .786 and prepare for a Butterfly Pattern extension to the .1.272 or 1.618.
Likewise, a Bat Pattern that completes at the .886 could evolve into a Crab Pattern — which features a Point B anywhere up to the .886. The pattern above, for instance, could be just the XA and AB legs, with an ultimate completion at the 1.618 of 892.12. Bottom line, either play a minor reversal at the .886 or have a pretty clear idea of the medium and longer-term potential.
In the chart above, for instance, there’s a trend line that should provide support near the last session’s low. So, there’s a decent chance that the existing reversal is all we’ll see. As always, stops are recommended just beyond the expected target just in case the pattern fails — as it does about 30% of the time.