Harmonic pattern trade on bitcoin

Bitcoin looks to be breaking out of the lower median line. Next key resistance level is the previous high at the X leg. Looking at the chart, we can see a clear harmonic bat pattern forming. If we are to hit the D leg zone, marked in yellow, I will be looking to enter a short position with an initial target of 11720 and secondary target of 11100.

Bat patterns are characterised by a series of Fibonacci ratio confluences in succession. While there is a bit of leeway for what can be considered a valid pattern, we generally will first an impulsive move to make up our X to A leg which we draw from a high to a low point on a bearish bat or a low to a high point on a bullish bat pattern. We then look for a fibonacci retracement of around 38.2% to 50% This is a valid bat pattern as long as it does not touch the 61.8% retracement level. We then look for a retracement of the A to B leg of the pattern to atleast 38.2% but not past the A leg. This provides us with the C point. Finally, we look for a completion point at D which is a retracement of 88.6% of the X to A. This provides us with a profitable short entry point at D leg. There are many ways to choose take profit targets but the most standard targets are a 38.2% and 61.8% retracement of the A to D point. This provides us with a good risk to reward.

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