5 EASY STEPS TO TRADE THE BAT SETUP
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STAGE 1:
THE BULLISH IMPULSE LEG
A bullish impulse leg is a strong move in price action to the upside.
The impulse leg can be a mixture of bullish and bearish candles, but must have a bullish overall direction.
The start of the impulse leg should be marked as X and the top of the impulse leg should be marked as A.
STAGE 2:
B LEG RETRACEMENT
Now that you have identified your X to A impulse leg you are now looking for the B leg, which is a retracement of the X to A impulse leg.
Take your Fibonacci retracement tool and draw from your X leg to your A leg.
The crucial Fibonacci levels you are looking for are the 50.00% and 61.60%
Price action must at least touch the 50.00% retracement but cannot touch the 61.80% retracement.
As you can see by the illustration, the candle does not need to close below the 50.00% retracement but must at least spike through.
The bullish Bat setup will be invalid if price action touches the 61.80% retracement of the X to A move.
STAGE 3:
C LEG RETRACEMENT
Once you have identified a valid X to A impulse leg and a B leg retracement, you are now looking for a valid C leg retracement.
Take your Fibonacci retracement tool and draw from your A leg to your B leg.
The crucial Fibonacci retracement level you are looking for is the 61.80%
Price action must at least touch the 61.80% but cannot spike above the A leg resistance.
The candle does not need to close above the 61.80% but must at least spike through.
The bullish Bat setup will be invalid if price action spiked above the A leg resistance.
STAGE 4:
D LEG COMPLETION
Now that you have a valid X, A, B and C move you are looking for the final leg in price action at which point you will buy the chosen currency pair.
Take your Fibonacci retracement tool and draw from your X leg to your A leg.
You are looking for a 88.60% which will now give you a valid D leg completion of the bullish Bat setup.
STAGE 5:
PLACING YOUR TARGETS
When looking to take targets on the bullish Bat Setup the first step is to use your Fibonacci retracement tool.
With your Fibonacci retracement tool draw from the A to D leg, you are looking for target 1 at the 38.20% and target 2 at the 61.80%.
To protect the profits you have accumulated at target 1 it is advised you move your stop loss to breakeven once the 38.20% target 1 has been attained, thus giving you a risk free trade to target 2.
KEY NOTES & RULES:
When trading the bullish Bat Setup, the pattern is meant to be traded at 88.60% D leg completion only.
If you believe the pattern is unfolding but price is only at point B, be patient and wait until price reaches the D leg completion.
The power of the pattern comes from converging Fibonacci levels of all points from X to D.
Point B must at least touch the 50.00% retracement but cannot touch the 61.80% from the X to A move.
Point C must touch the 61.80% but cannot spike above the A leg resistance.
Point D is complete when price action touches the 88.60% retracement of the X to A move.
Stop loss must be placed below the X leg structure support.
Stop loss must also be a minimum of a 1:1 risk reward to the 38.20% target 1.
Target 1 at the 38.20% retracement of the A to D move.
Target 2 at the 61.80% retracement of the A to D move.
CURRENCY PAIR:
This setup like any other is more profitable with certain currency pairs, you should do your own back testing on this prior to trading.
CANDLE COLOUR:
Blue = Bullish Candle
White = Bearish Candle
DISCLAIMER:
Please note I am only providing my own trading information and techniques for your benefit and insight, you should do your own due diligence and not take this information as a trade signal.
THE BULLISH IMPULSE LEG
A bullish impulse leg is a strong move in price action to the upside.
The impulse leg can be a mixture of bullish and bearish candles, but must have a bullish overall direction.
The start of the impulse leg should be marked as X and the top of the impulse leg should be marked as A.
STAGE 2:
B LEG RETRACEMENT
Now that you have identified your X to A impulse leg you are now looking for the B leg, which is a retracement of the X to A impulse leg.
Take your Fibonacci retracement tool and draw from your X leg to your A leg.
The crucial Fibonacci levels you are looking for are the 50.00% and 61.60%
Price action must at least touch the 50.00% retracement but cannot touch the 61.80% retracement.
As you can see by the illustration, the candle does not need to close below the 50.00% retracement but must at least spike through.
The bullish Bat setup will be invalid if price action touches the 61.80% retracement of the X to A move.
STAGE 3:
C LEG RETRACEMENT
Once you have identified a valid X to A impulse leg and a B leg retracement, you are now looking for a valid C leg retracement.
Take your Fibonacci retracement tool and draw from your A leg to your B leg.
The crucial Fibonacci retracement level you are looking for is the 61.80%
Price action must at least touch the 61.80% but cannot spike above the A leg resistance.
The candle does not need to close above the 61.80% but must at least spike through.
The bullish Bat setup will be invalid if price action spiked above the A leg resistance.
STAGE 4:
D LEG COMPLETION
Now that you have a valid X, A, B and C move you are looking for the final leg in price action at which point you will buy the chosen currency pair.
Take your Fibonacci retracement tool and draw from your X leg to your A leg.
You are looking for a 88.60% which will now give you a valid D leg completion of the bullish Bat setup.
STAGE 5:
PLACING YOUR TARGETS
When looking to take targets on the bullish Bat Setup the first step is to use your Fibonacci retracement tool.
With your Fibonacci retracement tool draw from the A to D leg, you are looking for target 1 at the 38.20% and target 2 at the 61.80%.
To protect the profits you have accumulated at target 1 it is advised you move your stop loss to breakeven once the 38.20% target 1 has been attained, thus giving you a risk free trade to target 2.
KEY NOTES & RULES:
When trading the bullish Bat Setup, the pattern is meant to be traded at 88.60% D leg completion only.
If you believe the pattern is unfolding but price is only at point B, be patient and wait until price reaches the D leg completion.
The power of the pattern comes from converging Fibonacci levels of all points from X to D.
Point B must at least touch the 50.00% retracement but cannot touch the 61.80% from the X to A move.
Point C must touch the 61.80% but cannot spike above the A leg resistance.
Point D is complete when price action touches the 88.60% retracement of the X to A move.
Stop loss must be placed below the X leg structure support.
Stop loss must also be a minimum of a 1:1 risk reward to the 38.20% target 1.
Target 1 at the 38.20% retracement of the A to D move.
Target 2 at the 61.80% retracement of the A to D move.
CURRENCY PAIR:
This setup like any other is more profitable with certain currency pairs, you should do your own back testing on this prior to trading.
CANDLE COLOUR:
Blue = Bullish Candle
White = Bearish Candle
DISCLAIMER:
Please note I am only providing my own trading information and techniques for your benefit and insight, you should do your own due diligence and not take this information as a trade signal.
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Penafian
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