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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bullish Crab®

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/22/2018
25,317 -126.93 -0.5%
10,436 -3.05 0.0%
742 -4.28 -0.6%
7,469 19.60 0.3%
2,756 -11.90 -0.4%
YTD
2.4%
-1.7%
2.6%
8.2%
3.1%
Tom's Targets    Overview: 10/11/2018
26,000 or 24,600 by 11/01/2018
10,200 or 11,100 by 11/01/2018
755 or 715 by 11/01/2018
7,700 or 7,200 by 11/01/2018
2,850 or 2,700 by 11/01/2018

Written by and copyright © 2005-2018 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: 8/9/2018

Overview

This article describes my analysis of the bullish 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 bullish crab can resemble a double top 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 downward 64% of the time, so the pattern is bearish, not bullish.

The crab pattern
Bullish Crab

 

Important Bull Market Results

Overall performance rank (1 is best): Not ranked
Break even failure rate (up/down breakouts): 9%/20%
Average rise/decline: 43%/15%
Throwback/pullback rate: 54%/74%
Percentage meeting price target (up/down breakouts): *69%/*15%

The above numbers are based on 188 perfect trades with upward or downward breakouts in a bull market. 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

Because of the many ratios used, the pattern is rare. I found 250 of them since 1990, but some of those were from a bear market. The statistics in this article only apply to bull markets.

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 figure. However, I used a 3 percentage point window on the last ratio to keep the sample count high.

 Characteristic Discussion
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 retrace value is shown in the figure
ABCTurn ABC shows a CB/AB retrace of one of the following Fibonacci ratios shown.
BCDExtension CD/CB is one of three Fibonacci ratios.
XADRetrace AD/AX is 161.8%.
crab retraces
Bullish Crab Ratios

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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 downward 64% of the time. What does that mean? A close below the bottom of the pattern means a downward breakout. So price has to drop from the low at D and close below it. An upward breakout means a close above the top of the pattern (A).

Price may rise after point D, and that happens 68% of the time. The average rise above D is 6% (median: 3%), so the move is short.

You may have better luck with the pattern if underlying support is near the XD valleys.

Example

An example crab pattern

The figure above shows an example of a bullish crab pattern, XABCD.

Here are the high/low prices of the various turns

X: 39.65 - 38.65
A: 41.90 - 41.32
B: 40.23 - 39.60
C: 41.36 - 40.89
D: 38.95 - 36.62

Here are the ratios.

AB/AX = (41.90-39.60)/(41.90-38.65) or 70.7%, using the low at B. Using the high at B, we get: (41.9-40.23)/(41.9-38.65) or 51%. The high-low range encompasses the 61.8% retrace, so I allow it.

CB/AB = (41.36-39.60)/(41.90-39.60) or 76.5%, using the high at C. The low at C gives (40.89-39.60)/(41.90-39.60) or 56%, which encompasses the 70.7% retrace, so I allow this.

CD/CB = (41.36-36.62)/(41.36-39.60) or 269.3%. However, the high-low range of D (41.36-38.95)/(41.36-39.60) or 136.9% encompasses the 261.8% retrace, so it's allowed.

AD/AX = (41.90-36.62)/(41.90-38.65) or 162.5% which is within three percentage points of 161.8%, so it's allowed.

This bullish crab is one of the few that breakout upward. Notice that price has to rise from D to close above A to stage an upward breakout. That's why upward breakouts only happen about a third of the time.

Price breaks out upward at E and throws back to the breakout price and keeps dropping, to F before recovering slightly. Recently, the stock has been below the breakout price, as the chart shows.

-- Thomas Bulkowski

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See Also

crab is a registered trademark of Scott Carney.

Written by and copyright © 2005-2018 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. If it jams, force it. If it breaks, it needed replacing anyway.