As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
Initial release: 6/27/2018. Statistics updated 8/28/2020.
This article describes my analysis of the bearish 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 bearish bat often resembles a big W chart pattern except that the turns are located using Fibonacci ratios. It's a rare pattern, so don't expect to find it
in your attic anytime soon. With so many complicated turns, you'll need better than 20/20 vision and a flashlight to find them, too. 
The idea behind this pattern is that once point D is located, price should turn lower there. It does, too, 86% of the time!
The above numbers are based on more than 500 perfect trades. See the glossary for definitions.
| Characteristic | Discussion | 
Bearish Bat Ratios
|
| Peaks/Valleys | The peaks and valleys in the pattern need not be consecutive. This is not a guideline, but an observation. | |
| XAB | Price 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 should be either 38.2% or 50%. | |
| ABC | Turn ABC shows a BC/BA retrace of one of the following Fibonacci ratios: 38.2%, 50%, 61.8%, 70.7%, 78.6% or 88.6%. | |
| BCD | Extension DC/BC is one of the following Fibonacci ratios: 161.8%, 200%, 224% or 261.8%. | |
| DAX | Retrace DA/XA is 88.6%. |
Because of the many ratios used, especially the 88.6% DA/XA retrace, the pattern is rare. I found 537 of them.
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.
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 (86% do), but the drop usually doesn't amount to much (14% average). Eighteen percent of chart patterns see price decline no more than 5% below D.
For targets, after peaking at D, price drops to A 35% of the time, to B 81% of the time, and to C 48% of the time.
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. However, the following chart shows an example of this type of overhead resistance and a bat pattern.
The figure on the right shows an example of a bearish bat pattern that isn't bearish at all.
Here are the high/low prices of the various turns
Here are the ratios.
The day after D, the stock dropped to a low of 65.10 before resuming its upward move. As of 4/10/19, the stock peaked at E, dropped to about 67, and wobbled up to 76.
I drew two horizontal red lines showing what I believe is an area of overhead resistance (between the lines). I would expect the stock to peak somewhere within that area. (It did. Price dropped to 67 later in June 2018).
Indeed, the peaks at X and to the left of it stop at or near the bottom red line. The stock has bumped up against overhead resistance of the top line at E and dropped along with the general market on the last day shown.
On the weekly chart, the stock is close to making new all-time highs, so there is no additional overhead resistance once it clears the January spike (the highest price on the chart).
-- Thomas Bulkowski
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