The Bat pattern was discovered by Scott Carney of Harmonic Trading in 2001. The Bat pattern is in the same family of Gartley’s 5-point corrective patterns, but has distinct harmonic ratios. Bat pattern incorporates a precise harmonic ratio (0.886 of XA swing). It also demands that the B (center) retracement should be less than 0.618 of XA swing. The B retracement differentiates between the Gartley and Bat patterns. The Gartley pattern must have a 61.8% retracement of XA swing, and in Bat patterns have the same XA swing retracement below 61.8% at “B”.

The Bat pattern’s Potential Reversal Zone (PRZ) is defined by 1.27AB=CD pattern, 1.62BC, 0.886 XA retracement levels. In bullish or bearish Bat patterns, a reversal from PRZ is anticipated for a potential long and short entry trades.

Trade: Once the Bat pattern is completed, wait for a higher-high bar or wide range bar to give a signal to enter a long trade. Enter a “long” trade one tick above the high of the confirmation (higher-high or wide range) bar. For bearish patterns, enter a “short” trade one tick below the low of the lower-low or wide-range bar.

Target: The target for the Bat patterns is similar to the Gartley patterns. First targets may be set at A level or 1.27 of XA swing. The secondary targets could be 1.62 to 2.0 of XA swing level.

Stop: The Bat pattern fails if price trades below the X level. Place a stop order one tick below X level.

Trading Bullish Bat

Trading Bullish Bat

The example above shows a bullish Bat formation from Boeing’s daily chart. Boeing formed a bullish Bat formation from mid January 2007 to March 2007. After XA swing, a 51.6% retracement is marked for “B” level. A Potential Reversal Zone (PRZ) is computed at 0.886 of XA, 1.62 of BC and 1.27 of BC range. After a series of “higher high” bars, Boeing stock reversed its prices from PRZ (at D). A “long” trade is triggered above the B level.

  1. Enter a “long” trade above B level at $88.
  2. Place a “stop” order below the low of D at $84.60.
  3. Place a “Target” 1.27 of XA level at $94.

Trading Bearish Bat

Trading Bearish Bat

The example above shows a bearish Bat formation from the NASDAQ futures (NQ) chart. NASDAQ futures formed a bearish Bat from January to April in 2006 from the range of 1872 to 1845. The B retracement level was at 51.3% confirming the Bat pattern. The D level was formed at 0.886 of XA range. A PRZ was computed from 1845 to 1853 levels for a reversal at D. Once prices traded inside the PRZ, a reversal bar is anticipated to signal a “short” trade.

  1. Enter a “short” trade below the low of the reversal bar at D level (1 820).
  2. Place a “stop” order above the D level 1847.
  3. Place “targets at “A” level and at 1.62 of XA swing at 1660.