UPDATE: USDCAD - Bullish Crab + Adding a Bullish Bat

FX:USDCAD   U.S. Dollar / Canadian Dollar
87 2
Last week I posted several posts about this pair. So far, all is going as anticipated. One was my longer term analysis on this pair (see Related Ideas: "USDCAD: So, You Wanna Go SHORT? B4 You Do, You Should Know..") In my other posts, I alerted about a POTENTIAL Bullish Crab pattern that was also developing (see Related Ideas:"UPDATE: USDCAD - Totally USELESS Crab: IMPROVED & MORE USEFUL! ")

With last week's price action, nothing has changed in my longer term analysis of this pair.

In this UPDATE, I am now adding a POTENTIAL bullish Bat pattern that also formed due to last week's price action. This bat is inside the crab pattern meaning that it's range and take profit targets are all contained within the range of the crab pattern . It can be expected that the bat will both complete and reach it's profit targets and would not invalidate the crab pattern . In fact, I would expect that prices may complete the bat, retrace to reach at least target 1 of the bat pattern and then resume downward momentum to complete the crab or just stop short of it at the .382 level of the larger Gartley pattern .
do you use BAMM theory in your trading ?
EverythingForex farid_ardavani
It depends on the time frame I am trading on and the R:R of the BAMM entry. If you are trading on smaller TF, remember that the potential pip profit will be smaller and may not be worth the risk. It also depends on the pattern that is being traded on as well. The BAMM trading method not only works on Bat patterns. They also work (with varying degrees of reliability) on other patterns as well. So if you are trading a Bat pattern, a BAMM trade will often give less than a 2:1 R:R whereas a crab or butterfly would give a better R:R on a BAMM trade (with a corresponding lower completion percentage).

If you are using the BAMM method to enter PRE-PATTERN trades (remember, these patterns DO NOT EXIST until the D point is reached!) then you must be conscious of the R:R for the BAMM trade. My trading plan calls for me to only take trades (regardless of entry method and type of trade) that have a 2:1 R:R or better. So many times, BAMM trades do not fit my trading plan R:R.

Now having said that, if I am trading on a larger TF, say the 4HR TF, than the R:R and potential pip profit may be worth the risk of the trade. Then I will also look at the current price action and try to find other supporting reasons why I should take the trade and not just because it's a valid BAMM entry. Make sense?
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