As of 11/11/2019
  Indus: 27,691 +10.25 +0.0%  
  Trans: 11,030 -37.61 -0.3%  
  Utils: 830 -5.55 -0.7%  
  Nasdaq: 8,464 -11.03 -0.1%  
  S&P 500: 3,087 -6.07 -0.2%  
YTD
 +18.7%  
 +20.3%  
 +16.4%  
 +27.6%  
 +23.1%  
  Targets    Overview: 10/31/2019  
  Up arrow27,750 or 26,900 by 11/15/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,500 or 8,000 by 11/15/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/11/2019
  Indus: 27,691 +10.25 +0.0%  
  Trans: 11,030 -37.61 -0.3%  
  Utils: 830 -5.55 -0.7%  
  Nasdaq: 8,464 -11.03 -0.1%  
  S&P 500: 3,087 -6.07 -0.2%  
YTD
 +18.7%  
 +20.3%  
 +16.4%  
 +27.6%  
 +23.1%  
  Targets    Overview: 10/31/2019  
  Up arrow27,750 or 26,900 by 11/15/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,500 or 8,000 by 11/15/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Bullish Bat®

 

Initial release: 6/28/2018. Rank updated 7/25/19.

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.

The bat pattern
Bullish Bat

Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 22 out of 56/8 out of 53
Break even failure rate: 17%/17%
Average rise/decline: 46%/16%
Throwback/pullback rate: 69%/58%
Percentage meeting price target*: 61%/38%

The above numbers are based on 121/117 perfect trades with upward breakouts. See the glossary for definitions.

* I used the height of the pattern to determine a target after a breakout.

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Identification Guidelines

 Characteristic Discussion bat retraces
Bullish Bat Ratios
Peaks/ValleysThe peaks and valleys in the pattern need not be consecutive. This is not a guideline, but an observation.
XABPrice 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%.
ABCTurn 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%.
BCDExtension CD/CB is one of the following Fibonacci ratios: 161.8%, 200%, 224% or 261.8%.
XADRetrace 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.

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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 up from the low at D 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

An example bat pattern

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 = (21.36-19.36)/(21.36-16.60) or 42.0%. However the high-low range of B (20.26-19.36) encompasses the 38.2% retrace, so I allow it.

CB/AB = (20.85-19.36)/(21.36-19.36) or 74.5%. However the high-low range of C (20.85 to 20.50) encompasses the 70.7% retrace, so I allow this.

CD/CB = (20.85-17.22)/(20.85-19.36) or 243.6%. However, the high-low range of D (18.66 to 17.22) encompasses the 161% retrace, so it's allowed.

AD/AX = (21.36-17.22)/(21.36-16.60) 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 (22-17.22)/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.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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