As of 10/23/2020
  Indus: 28,336 -28.09 -0.1%  
  Trans: 11,880 +131.58 +1.1%  
  Utils: 894 +2.40 +0.3%  
  Nasdaq: 11,548 +42.27 +0.4%  
  S&P 500: 3,465 +11.90 +0.3%  
YTD
-0.7%  
 +9.0%  
 +1.7%  
 +28.7%  
 +7.3%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20
As of 10/23/2020
  Indus: 28,336 -28.09 -0.1%  
  Trans: 11,880 +131.58 +1.1%  
  Utils: 894 +2.40 +0.3%  
  Nasdaq: 11,548 +42.27 +0.4%  
  S&P 500: 3,465 +11.90 +0.3%  
YTD
-0.7%  
 +9.0%  
 +1.7%  
 +28.7%  
 +7.3%  
  Targets    Overview: 09/29/2020  
  Up arrow29,300 or 27,400 by 11/01/2020
  Up arrow12,000 or 11,000 by 11/01/2020
  Up arrow915 or 840 by 11/01/2020
  Up arrow12,800 or 11,300 by 11/01/2020
  Up arrow3,700 or 3,400 by 11/01/2020
CPI (updated daily): Arrows on 9/25/20

Bulkowski on the Bearish Crab Pattern®

 

Initial release: 8/8/2018. Statistics updated on 8/28/2020.

Bearish Crab: Overview

This article describes my analysis of the bearish crab 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 bearish crab loosely resembles a double bottom chart pattern except that the turns are located using Fibonacci ratios.

The crab pattern
Bearish Crab

 

Bearish Crab: Important Bull Market Results

Overall performance rank for downward moves: 1 (best) out of 5 (versus other Fibonacci patterns, only)
Break even failure rate: 20%
Average decline: 14%
Percentage reversing at point D: 87%

The above numbers are based on more than 1,350 perfect trades in bull markets. See the glossary for definitions.

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Bearish Crab: Identification Guidelines

For the associated ratios, consult the figure to the right of the table.

 Characteristic Discussion crab retraces
Bearish Crab Ratios
Peaks/ValleysThe peaks and valleys in the pattern need not be consecutive. This is not a guideline, but an observation.
XABPrice climbs to peak at X, the first point in the pattern. It drops from there to valley A and rises to peak B. The BA/XA retrace is one of the three ratios shown.
ABCTurn ABC shows a BC/BA retrace of one of six Fibonacci ratios.
BCDExtension DC/BC is one of three Fibonacci ratios.
DAXRetrace DA/XA is 161.8%.

Because of the many ratios used, especially the 161.8% DA/XA retrace, the pattern is somewhat rare. I found 1,357 in a bull market.

You'll need a computer with software to find the pattern.

Find five peaks/valleys (turns) where the ratio of one leg to another is one of the Fibonacci numbers listed in the figure. However, I used a 3 percentage point window on the last ratio (161.8% becomes 158.8% to 164.8%) to keep the sample count high.

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Bearish Crab: Trading Tips

I don't offer much trading help because I'm new to this pattern.

Price may dip after point D, in fact it's likely that it does so (87% do), but the drop usually doesn't amount to much (14% average which isn't bad for a swing trade). Twenty percent of chart patterns see price decline less than 5% below D.

You may have better luck with the pattern if overhead resistance matches or is near the XD peaks. Think of this as a ceiling which takes some pushing to break through.

I did not test or examine the pattern for this behavior.

For targeting, price drops to X 59% of the time, to A 18% of the time, to B 37% of the time, and it reaches the price of C 23% of the time.

Bearish Crab: Example

An example crab pattern

The figure above shows an example of a bearish crab pattern that isn't very bearish. The pattern begins at X and ends at D.

You might complain that X isn't a turning point, but it's a minor high, the highest peak in five price bars, so it's acceptable.

Notice that the stock dips after D, but then recovers and breaks out at E (the first close above the green line, setup by the high at D).

Here are the high/low prices of the various turns

X: 127.80 - 126.26
A: 116.12 - 113.57
B: 121.57 - 119.82
C: 118.49 - 115.74
D: 136.24 - 133.01

Here are the ratios.

BA/XA = (121.57-113.57)/(127.80-113.57) or 56% (using the high at B). Using the low at B gives: (119.82-113.57)/(127.80-113.57) or 44%. This means the high-low range of B encompasses the 50% Fibonacci ratio.

BC/BA = (121.57-115.74)/(121.57-113.57) or 73% (using the low at C). Using the high at C gives (121.57-118.49)/(121.57-113.57) or 38.5%, which is almost exactly the 38.2% ratio.

DC/BC = (136.24-115.74)/(121.57-115.74) or 352%. Using the low at D gives (133.01-115.74)/(121.57-115.74) or 296%. The 352% to 296% range encompasses the target 314% value, so it qualifies.

DA/XA = (136.24-113.57)/(127.80-113.57) or 159% which is within three percentage points of 161.8%, so it's allowed.

-- 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:  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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