Crude Oil Harmonic Bat? 38.80 Price Target

NYMEX:CL1!   Light Crude Oil Futures
4102 4 14
The Bat ( bullish )

The harmonic bat pattern was discovered by Scott Carney in 2001. Carney maintains it is one of the most accurate patterns, and requires a smaller stop loss than most other patterns.

Key features to look out for are:

This is one of the retracement patterns (along with the Gartley Pattern ) - and is a deep retest of Support (in the case of a bullish Bat ) or Resistance (for a bearish bat ) around the X level.

If a Bat fails - it can often "morph" into a Crab Pattern where the D point exceeds the X point both in length of time and price.

The Bat is defined by the . 886 retracement of move XA as Potential Reversal Zone. The Bat pattern has the following qualities:

1.Move AB should be the .382 or . 500 retracement of move XA.
2.Move BC             can be either .382 or . 886 retracement of move AB.
3.If the retracement of move BC             is .382 of move AB, then CD should be 1.618 extension of move BC             . Consquently, if move BC             is .886 of move AB, then CD should be 2.618 extension of move BC             .
4.CD should be . 886 retracement of move XA.

For the perfect Bat Harmonic pattern , the X-A retracement would use a market price differential multiplier 0.50 while the A-B retracement would use the market price differential multiplier range of 0.50 through 0.618. Correspondingly, the B-C projection would use the market price differential multiplier of 2.0 while the X-A projection would use the market price differential multiplier of 0.886 as before. Harmonic patterns and their respective market price differential multiplier could include those values having up to 3% -/+ variance of the cited Fibonacci numbers.

In this chart for NYMEX Light Crude

1. Move AB is . 500 retracement of move XA.
2. Move BC             is . 886 retracement of move AB.
3. With BC             at a . 886 retracement , $38.80 price target, (in this case BC             .5 of CD) CD can be a 2.00 extension of BC             . Consquently, if move BC             is .886 of move AB with BC             .5 of CD, then CD should be 2.00 extension of move BC             .
4. At $38.80 CD is a . 886 retracement of move XA

Fibonacci Number Derivations

The Fibonacci numbers utilized in Harmonic Trading are directly or indirectly derived from the primary ratios 0.618 and 1.618 from the Fibonacci sequence. Although other technicians may utilize different percentage ratios, the following list comprises the only ratios that determine precise Harmonic patterns . Primary Ratios: 0.618 & 1.618 (From the Fibonacci Number Sequence).

Primary Derived Ratios: 0.786 = square             root of the 0.6180.886 = fourth root of the 0.618
1.13 = inverse of the 0.886 (1/0.886)
1.27 = inverse of the 0.786 (1/0.786)
Complimentary Derived Ratios: 0.382, 0.50, 1.41, 2.0 , 2.24, 2.618, 3.14, 3.618
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