The alternate bat pattern was introduced in 2003, taking inspiration from the bat pattern. It’s also a variation of the more popular Gartley pattern. If you know the alternate bat pattern rules, it can be an exceptional tool for precise trading.
What Is Alternate Bat Pattern?
In a nutshell, the alternate bat pattern is a configuration of the original bat pattern. It detects an imminent reversal level. Further, this pattern rarely happens, but when it shows up, it can provide valuable trading insights.
The introduction of the altbat pattern came after frustrations on the standard bat pattern.
To put it simply, this pattern has an 88.6% extension beyond Point D. Meanwhile; point D moves a bit above or below Point X. In turn, this movement can show whether the market is bullish or bearish.
The alternate bat consists of five legs. Meanwhile, the shape and points of these legs will dictate what your next move should be.
For example, it will let you know when the prices are low, so you can take advantage of the price and buy before the price corrects. In contrast, you can also determine if the market is bullish, so you can sell when the price is at its peak.
How Does the Alternate Bat Pattern Work?
The alternate harmonic bat pattern has several rules. These rules must be present, so you can confirm that it’s indeed an alternate bat. Below are the conditions that must be present in the pattern:
- The endpoint at the XA leg must have a 113% retracement
- Point B must have a retracement of 38.2% or less than that of the XA leg
- The minimum projection is 200%
- There should be an extended pattern of the AB-CD leg, which is often at 161.8%
- Use other patterns to confirm divergence detection, including composite index
What Is Bullish and Bearish AltBat Pattern?
Knowing if the market is bullish or bearish is critical when trading. This way, you’ll know the right time to enter or exit the market. It can time your trades perfectly, increasing the potential of a profit.
A bullish alternate bat pattern resembles a letter M. The first leg is strong, while the second leg is weaker. It then goes up on the third leg with a 0.382 retracement. Next, it has an extended fourth leg, with the end point lower than the first point. It would increase again on the last leg.
On the other hand, a bearish alternate bat pattern looks like a letter W. The first point is a sharp decrease in the XA leg, followed by a slight rise on the second leg. The third leg slightly lowers, and there’s a steep incline on the fourth leg. After which, there’s a drop on the fifth leg.
Trading the AltBat Pattern
When trading, it’s not enough that you just look at the alternate bat harmonic pattern. Instead, it also helps if you combine it with other patterns. This will act as a confirmation of a previous assumption.
Among others, one that you can use with alternate bat is relative strength index. The latter is a popular momentum indicator, making it crucial in understanding the market. Its popularity means that more people can react on its signals, which can drive the prices up.
How to Detect the Alternate Bat Pattern
The best way to detect this harmonic pattern is to use our Automated Harmonic Pattern Recognition software for TradingView, NinjaTrader, TradeStation, MotiveWave, MT4 and ThinkorSwim Trading Platforms. Check them out HERE ▶
As earlier mentioned, it is a bullish pattern when you see a letter M. On the other hand, when it’s a letter W, you’ll find a bearish pattern.