Written by and copyright © 20052018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.
Initial release: 6/28/2018
Overview
This article describes my analysis of the bullish bat pattern as described by publicly available information and common sense rules to determine valid patterns. Additional rules may or may
not improve performance. I tested the pattern using only the below identification guidelines.
The bullish bat often resembles a big M chart pattern except that the turns are located using Fibonacci ratios. It's very rare, and you'll need a computer with
pattern recognition software to fine it.
The breakout direction is upward just 51% of the time, which is about random. That's odd because price ends the pattern near the low. I expected a downward breakout to occur most often, but
that's not what happens.

Bullish Bat

Important Bull Market Results
Overall performance rank (1 is best): Not ranked
Break even failure rate: 17%
Average rise: 46%
Throwback rate: 69%
Percentage meeting price target: *61%
The above numbers are based on 121 perfect trades with upward breakouts. See the glossary for definitions.
* I used the height of the pattern to determine a target after an upward breakout.


Identification Guidelines
Characteristic  Discussion 
Peaks/Valleys  The peaks and valleys in the pattern need not be consecutive. This is not a guideline, but an observation. 
XAB  Price drops to valley X, the first point in the pattern. It rises from there to A and retraces to B. The AB/AX retrace should be either 38.2% or 50%. 
ABC  Turn ABC shows a CB/AB retrace of one of the following Fibonacci ratios: 38.2%, 50%, 61.8%, 70.7%, 78.6% or 88.6%. 
BCD  Extension CD/CB is one of the following Fibonacci ratios: 161.8%, 200%, 224% or 261.8%. 
XAD  Retrace AD/AX is 88.6%. 
Because of the many ratios used, especially the 88.6% AD/AX retrace, the pattern is rare. I found 290 of them since 1990, but just 121 had upward breakouts.
You'll need a computer with software to find the pattern.
Find five peaks/valleys where the ratio of one leg to another is one of the Fibonacci numbers listed in the above table. However, I used a 3 percentage point window on the last
ratio (88.6% becomes 85.6% to 91.6%) to keep the sample count high.

Bullish Bat Ratios

Trading Tips
I don't offer much trading help because I'm new to this pattern.
My tests show that the pattern breaks out upward 51% of the time. What does that mean? A close above the top of the pattern means an upward breakout. So price has to rise from
the low at D up to close above A.
Price may dip after point D, and that happens 24% of the time. The average decline below D is 7% (median: 6%), so be careful when relying on a bullish reversal at D.
You may have better luck with the pattern if underlying support is near the XD valleys.
Example
The figure on the right shows an example of a bullish bat pattern, XABCD.
Here are the high/low prices of the various turns
X: 16.60
A: 21.36
B: 19.36
C: 20.85
D: 17.22
Here are the ratios.
AB/AX = (21.3619.36)/(21.3616.60) or 42.0%. However the highlow range of B (20.2619.36) encompasses the 38.2% retrace, so I allow it.
CB/AB = (20.8519.36)/(21.3619.36) or 74.5%. However the highlow range of C (20.85 to 20.50) encompasses the 70.7% retrace, so I allow this.
CD/CB = (20.8517.22)/(20.8519.36) or 243.6%. However, the highlow range of D (18.66 to 17.22) encompasses the 161% retrace, so it's allowed.
AD/AX = (21.3617.22)/(21.3616.60) or 87.0% which is within three percentage points of 88.6%, so it's allowed.
After price makes a higher low at D (compared to X), the stock recovers. It closes above A and stages an upward breakout. The ultimate high, as I write this, is 22.00. From the low
at D, the rise measures (2217.22)/17.22 or 28%. That's a nice gain providing you buy at the low at D and sell at the ultimate high at 22.
If you waited for confirmation (a close above A, which happened on May 17), and bought at the open the next day, you'd receive a fill of about 21.49. So far, you'd have made 0.0%.
 Thomas Bulkowski
Bat is a registered trademark of Scott Carney.
Written by and copyright © 20052018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.
Always listen to experts. They'll tell you what can't be done and why. Then do it.
