Bullish Crab
Like all of the patterns in the harmonic family, the Crab pattern is defined by Fibonacci retracement levels between 4 legs of price movement. The ratios of these moves for a Bullish Crab are defined as follows:
- AB is a (Case a.) 0.382 or (Case b.) 0.618 retracement of the first upwards impulse XA
- BC can be either (Case a.) a 0.382 or (Case b.) 0.886 retracement of AB
- In Case a.; CD will be a retracement of 2.24 below B
- In Case b.; CD will be a retracement of 3.618 below B
- CD will be a retracement of 1.618 from the original impulse origin X
Bearish Crab
The Bearish Crab formation at “D” expects a price reversal in direction – for the price to fall. The ratios defining a Bearish Crab are:
- AB is a (Case a.) 0.382 or (Case b.) 0.618 retracement of the initial downwards impulse XA
- BC can be either (Case a.) a 0.382 or (Case b.) 0.886 retracement of AB
- In Case a.; CD will be a retracement of 2.24 above price B
- In Case b.; CD will be a retracement of 3.618 above price B
- CD will be a retracement of 1.618 from the original impulse origin price X
Crab Identification with PatternSurfer
PatternSurfer scans the markets in real time for the formation of Crab patterns, along with the dozens of other patterns across Harmonic, Wolfe Wave and Geometric pattern families.
On recognition of a Crab pattern, PatternSurfer will display all coordinates, including the Actual Pattern Completion Price (D) as per the market prices, as well as the Ideal Pattern Completion Price (an exact D as per the strict Fibonacci ratio). D defines the potential entry point for the Crab pattern.
To maintain a profitable risk-reward ratio, the price at X can be kept as a conservative stop-loss for a trade based on a Crab.
With PatternSurfer, users are also able to identify the formation of a Crab pattern before point D is reached. This is called an “Approaching” pattern, and traders will be made aware of the expected (Ideal) Completion Price, and the current Actual Completion Price which is approaching the Ideal D.