Trading the Bat Pattern

This is a free trading lesson on how to trade the Bat pattern including drawing Fibonacci retracements, entries, stops and targets.

The Bat pattern is a type of advanced pattern seen in markets including Forex, Stocks and Commodities. Advanced patterns generally form during times of consolidation and the Bat pattern is no exception.

To identify the Bat pattern on your charts involves using Fibonacci retracements to measure “legs” or “zig zags” of Price Action in order to predict the next move’s direction and distance.

  • The first step is to identify a recent move of Price Action that was then followed by a retracement. The first point should ideally be a swing high or swing low and will be referred to as point “X”.
  • The point at which Price Action then begins to retrace shall be called “A”. The retracement must be at least 0.382% of “X” to “A” but must not touch 0.618%.
  • The point at which Price Action stops retracing and continues in the original direction shall be called “B”.
  • This continuation must not exceed point “A”, and ideally should be a 0.50% retracement of “A” to “B”. This is point “C”.
  • Finally point “D” is achieved if Price Action retraces 0.886% of “X” to “A”. The completed pattern should roughly resemble a “W” or “M” shape on the chart.
  • On completion of the pattern it’s time to trade with the original direction, that is in the same direction Price Action was moving when going from “X” to “A”.
  • Stops should be just beyond “X”, outside the pattern.
  • Target 1 is the 0.382% Fibonacci retracement of “C” to “D”.
  • Target 2 is the 0.618% retracement of “C” to “D”.
  • Don’t forget to move your stop to break even when target 1 is reached.