KVE
Long

EUR/USD: 4H bullish bat to resume uptrend or complete H&S?

FX:EURUSD   Euro/U.S. Dollar
466 15 11
Getting to TP1 of the daily bearish bat ... I took partial profit on that position (part of TP1, TP2 still in place) with all remaining stops now at 1.1455.

Possible new bat completion in the area of the daily bat TP1, so some retracement may occur there... RSI getting oversold, no divergence however (lower low atm on RSI and MACD ...).

As long as we don't break below the new bat's X point the short-term uptrend is still in place so maybe this bat might get us back to that uptrend... Also: possible H&S pattern could be forming... In such a case we could be looking at a more considerable up move so setting the targets better than usual for this bat (0.382 and 0.618 retracements) is possible (also the 0.382 ret. for this bat has poor R/R so not really ideal to use the usual targets, at least not with the SL as used here....).

Anyone should decide for themselves, depending on their individual rules, if this is worth trading and how to set SL and TP levels for this particular situation. If your bat trading or money management rules tell you otherwise: adjust accordingly or don't trade it at all, stick to your rules!
If traded I would however strongly recommend trailing SL closer to or entirely at BE when price hits either that 0.382 fib and/or the trendline , just in case we get a different scenario... Or just wait for confirmation...

Alternative scenario: Based on the fact that we don't have strong confirmation from the momentum indicators we could be getting only a limited retracement after which we could continue down to the trendline or the daily bat TP2 below...
Possible long opportunity on the bounce or short opportunity on the break of the trendline . Daily bat TP2 just a little lower so watch out if you trade the breakout: look for confirmation!
Comment: Posible short to bat completion?
snapshot
Trade active: Entered long 1.1260, we'll see...
Trade closed: stop reached: Entered a new long just now based on 1H MACD divergence, small position, SL below the low, trail to BE at 1.1250.

4H lower low on MACD, so still bearish there, daily close to 100MA and tested lower BB today, next possible support at 1.1148.
Don't think it will break above the trendline coz there is divergence on moving averages in daily chart...won't let the price go up...just my opinion!!!
Reply
KVE arif_awan
Yes, it's not convincing, the alternative scenario as described in the intro is possible..., we'll see.
Thanks for commenting!
Reply
You mean Gartley, right?
Reply
sinakhan98 sinakhan98
Honestly I dont know these harmonic patterns so well but I remember that 61.8% is the Gartley pattern and Bat is 50%. But I could be wrong, that was just a question of mine :-)
Reply
KVE sinakhan98
Hi, You're right 50% B for bat and 61.8% B for Gartley.
In the original description of Gartley patterns by H.M. Gartley (before bats were even defined) there were no real fib ratio's assigned, they were added by others afterwards, and there were different views on them...
In 'Harmonic trading vol.1...' by Scott M Carney the author writes that the Gartley pattern requires a precise (more precise than other harmonic patterns) 61.8% retracement for B and for bat the B point must be less than 0.618... (preferably 38.2% or best is 50%). Based on this the pattern which I drew here is a technically a bat
Reply
KVE KVE
But of course this can be debated upon..., 0.574 is sort of in between...
I also combined possible nearby support and the larger bat TP1 confluence to give me more confidence in calling it a bat.

If it reverses where it is now (if we get at least 0.382% retracement from the last low and certainly when we get to the 0.618%) then it would have reversed at the 0.786% of XA, making it a Gartley... In that case I would cancel my orders. For now there still on...
Reply
Ok now I see the difference. My B is at 1358 and yours at 1385 which means we have different C points as well and which makes the one Im looking at to a perfect Gartly. But thanks anyway :-)
Reply
KVE sinakhan98
Well, I looked at both options before I published and chose the bat instead because the one you are talking about falls short in its C point...: 0.341 instead of the min. 0.382...

We'll have to see what happens, a move up to 1.1357 (Gartley TP1) before we reach my bat's PRZ (between 1.1259 and 1.1237) wil confirm that it's most likely a Gartley and invalidate my bat. A close below 1.1237 technically also invalidates the bat (max. BC projection of 2.618).

If we move down to 1.1259 before we reach 1.1357 then the bat is still valid and I will look at smaller TF's for confirmation and trade it!
Reply
Well that depends on where you start your fibonacci. If you start to measure at the green bullish candle high (the wick) at 1.1615 then you are right. I start at the next bearish candle high. Thats just a matter of definition :-)
Reply
KVE sinakhan98
Yeah, lol, and a bit of 'pattern fitting' ;) Anyway even taking the next candle open gives 0.377 and if you don't use the wick on A then you shouldn't use the wick on B and C either if you're consistent, so then you will get 0.281 or something like that...

I always include the highs and lows since on another timeframe the open and close levels of next candles are also different so you will get a slightly different pattern on each TF..., I try to keep it so that my patterns give the same entry on all the TF's as much as possible...

But hey if you've devised a system unique to yourself and it works then that's all that matters, in that case you shouldn't even worry if other people draw it differently since it's your own system!
Cheers and good luck!
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