Traders use a wide range of patterns to find trade opportunities and a trend reversal. But one of the most effective harmonic pattern formations that guarantee success is a crab pattern. Thanks to its Fibonacci ratios, this pattern gives you a clue of what’s about to happen to the market. Check out the two examples at the foot of this artle, they will blow your mind!
What is a Crab Pattern?
The crab pattern harmonic is a unique pattern resembling the butterfly chart pattern. Scott Carney discovered this pattern in 2000, and it’s one of the most accurate and powerful technical analysis tools. Like the other harmonic patterns, this pattern comes with four price swings and 5 points.
What Is a Bullish Crab Pattern?
When bullish crab market trading, the crab patterns serve as great reversal patterns. This pattern lets bearish investors trade highs and lows while riding the entire wave. The bullish crab pattern shows you when a bearish market is about to change while giving you more trading opportunities.
But it has to follow certain bullish crab pattern rules. The crab pattern resembles the butterfly harmonic, with the main difference them being the CD wave.
For the butterfly pattern, the CD will be 127% of XA, while the CD retracement of the bullish crab pattern target is 161.8%. Therefore, you need the Fibonacci ratios to differentiate the two.
How to Identify a Bullish Crab Pattern?
All harmonic patterns have 5 points (XABCD), so other than forming the “M” pattern, it has to follow the following rules:
- XA forms when the market’s price rises from point X to A before retracing to point B.
- AB should retrace between 38.2% and 61.8% of XA.
- The price then moves upwards, retracing between 38.2% and 88.6% of AB.
- CD is a crucial part, and it retraces about 161.8% of XA. If CD exceeds 161.8%, then it’s a strong signal. But CD should range between 2.24 and 3.618 of BC.
For some harmonic patterns, the AB extension should be the same as the CD pattern.
Example of a Bullish Crab Pattern
The Chart below shows thwe TradingView Version of our Automated Harmonic Patterns Trading Indicator. The previous Bearish Gartley Pattern didnt complete in our Automated D Pivot Completion Zone and so with xBrat Rules , the pattern failed and was not tradeable. Then a Bullish Crab Pattern formed and the D Pivot completed in our automated completion zone and the resulting Bullsih trade was very strong.
This nex chart shows a Bulliosh Bat Pattern that didnt take off as the D Pivot for the BAT completed below the auto completion zone. Then a Bullish Crab Pattern formed and completed in the Auto completions zone and the resulting Bullish Trade was basically massive! Hopefully you can see a pattern here? Bullish CRAB Patterns do in fact form consistently immediately after other harmonic patterns fail!