USDJPY: Bearish Bat + Explanation

14 thg 9, 2016

Hi Traders,

Here is a bearish bat pattern setup on USDJPY with D pattern completion at 103.950.

Read below if you are unsure how to identify a bat pattern.

1) Look for an impulse leg, which will mark the beginning of the pattern. I like the analogy of seeing the impulse leg as a "Sore Thumb" high or low point, something that immediately sticks out on the chart. This is the X point.

2) Grab your fibonacci retracement tool and draw from the X (sore thumb high or low) to the lowest/highest point of the move. This is the A point.

3) Price must touch the 50% retracement of the XA leg, BUT NOT TOUCH the 61.8%. This is the B point.

4) Draw a fibonacci retracement from the A to B point, we are looking for AT LEAST a 61.8% retracement. If price exceeds the A point the pattern is invalid. This is the C point.

5) To find the completion at D, draw a fibonacci retracement from XA and if price reaches the 88.6% retracement the pattern has completed. This is the D point.

6) I place stops 10-15 pips above or below the X leg.

7) Targets go at the 38.2% and 61.8% retracement of the A to D leg.

Hope that helps! Remember to leave me a like or comment below if this helped you.

Good luck and good trading,

Luke