The Responsible Trader

NOTE:  Images taken from the books on Harmonic Trading by Scott Carney

The Perfect Bat Pattern is very similar to the Bat Pattern except for the B Point Retracement. In the Bat Pattern the B Point Retracement is a range from 38.2% to 50.0% while in the Perfect Bat Pattern is  an exact 50%.

Let us take a look at the features of the Bat Pattern:
a.   Retracement of the B point at exact 50.0%. .
b.   Retracement of the C point within a range of 0.50% to 61.8%
c.    BC projection of 200.0%
d.    Constraint of 88.6% Retracement of the XA leg similar to the Bat Pattern.

Let us draw the Pattern using the following procedures:
1. Draw a Fibonacci Retracement Grid starting from point X to point A to get where point B retraced. In this case it is exactly  50.0%.

2. Draw a Fibonacci Retracement Grid starting from point A to point B to get where point C retraced. In this case it is 61.8%.%

3. Project BC by drawing a Fibonacci Extension from C to B using C as Point of Origin and Point of Termination. From the Perfect Bat Pattern image this should be exactly 200.0%  which is at 0.04. We  mark 0.04 as our tentative point D or PRZ.

4. The next step is to draw the Constraint which is an 88.6% Retracement of the XA leg.  We see that this 88.6% Retracement falls at 0.03 lower than our tentative D of 0.04.In cases like this the tentative D becomes the minimum PRZ and the Constraint at 88.6% becomes the Maximum PRZ. To avoid confusion, we mark the maximum PRZ  as D1 and the minimum PRZ  as D2.

5. This figure shows the Pattern with the corresponding Fibonacci measurements.

6. We now draw the Pattern by connecting the points of the two Triangles. In TRT Ich-Monics, we take the Constraint as the Final Determinant of the D  Point but we also take note of the D2 in case the stock makes a reversal on this point. This is the complete Perfect Bullish Bat Pattern.

7. Just like in our last lesson, to make the pattern useful, we have to draw a final Fibonacci Retracement Gridline starting from Point A to Point D to establish our TRT Critical Action Zones.

 

To better appreciate the Pattern, I would like us to take a look at some examples.
This  is PA with a Perfect Bullish Bat Pattern.

 

This is SECB  with a Perfect Bearish Bat Pattern.

 

NOTE:  Sometimes some figures appear as decimals. At other times they appear as percentages. To convert decimals to percentage just move the decimal point two places to the right. For example 1.618 is expressed in percentage as 161.8%.

Next Lesson: THE ALTERNATE BAT PATTERN