ALTERNATE BAT HARMONIC PATTERN VALIDATOR

in-depth view for forex tool #19
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This tool validates Alternate Bat pattern while providing proactive rates throughout the pattern formation. It uses the common pattern conditions by default, with the ability to fine-tune different settings that doesn't affect the pattern's structure.

Settings available for this tool cover the validation method for point C, take profit levels, and stop loss safety.

The tool is able to save patterns with detailed data, reload a saved pattern, and send a trade setup to "Custom Trade" trading tool.

In this page we are aiming to demonstrate the tool in details and how it integrates with the other tools in the kit, to accomplish that we will be using a real Alternate Bat pattern as an example throughout the page. That pattern started forming on the H1 chart for USD/CAD on 07-Mar-2016 19:00, and was traded at checkpoint#2.
The sections in this page will cover the default pattern conditions used by the tool, tool's data flow within the toolkit, rates' path input method, in-depth demonstration for the pattern progression, tool's settings, trading a pattern, and saving a pattern.

DEFAULT ALTERNATE BAT PATTERN CONDITIONS

Alternate Bat, like most harmonic patterns can be subjective at some areas like stop loss and Fibonacci ratios for complementary relations. The tool uses the most common and logical conditions for its calculation algorithms, the illustration below details the default conditions and Fibonacci relations used by the tool.

Harmonic Alternate Bat default pattern conditions illustration

Harmonic Alternate Bat default pattern conditions illustration

The Harmonic Alternate Bat pattern is one of the variations based on Gartley pattern, it was found by Scott Carney in 2003, his interpretation of the pattern can be checked on his official website.

TOOL'S DATA FLOW

The below illustration details the type of data flow between this tool and other directly connected tools, to see the bigger picture for the whole toolkit's data flow please check this illustration.

Detailed data flow from/to "Alternate Bat" tool

detailed data flow from/to "Alternate Bat" tool

An Alternate Bat pattern can be directly saved to history once the pattern reach proactive status for its final point(PRZ).

When "take trade" button is used, the tool will automatically save the pattern to history and send the trade setup to "Custom Trade" trading tool.

Any saved Alternate Bat pattern can be reloaded from "Harmonic Patterns" history tool back into this tool.

TOOL'S INPUT METHOD

Swing rates that define a path for the pattern are entered manually, a method that might not appeal to many forex traders who want a ready to trade pattern. However, the advantages gained by using this method of rates input can't be acquired using any different way.

The ability to validate all harmonic patterns simultaneously using a single path, getting proactive possible rates for the next point(or PRZ), knowing the exact precision of each point, the ability to test expected rates to see if the pattern is worth keeping an eye on. Those are a few advantages gained as a result of using that input method.

PATH TO VALIDATE

"Alternate Bat" tool input

tool's input

This is where the rates for the path is entered to be validated against Alternate Bat pattern conditions, below is an explanation for the 3 inputs controlling the path.

The inputs for this section affects all the 10 harmonic tools, the pattern watch window will be updated with all the harmonic tools status whenever a change in path occurs.
CURRENCY PRESET

This choice will determine the pip's decimal and fractional decimal to be used for calculations. Can be chosen from any of the 6 custom currency presets. Although we are trading USD/CAD, the currency preset selected is EUR/USD as both pairs have the same characteristics.

DEVIATION SETUP

This setting sets the "quality" of the pattern by limiting a point to be marked valid only if its deviation is less than or equal the defined deviation value, which can be set to any number between 0.250% to 4.750%. Deviation is applied smartly to each point with respect to the swing originating the Fibonacci relation.

PATH SETUP

The 5-points path (rates) creating the pattern are entered here sequentially.

TOOL PROGRESSION IN-DEPTH

The tool starts providing proactive rates as soon as points X & A are entered, and validation starts as soon as point B is entered. The buttons below can help with understanding what the tool does at each phase of the pattern, while the rest of this section will be a demonstration for the actual progression of Alternate Bat pattern that was traded on checkpoint #2.

  • 1
    X, A
  • 2
    X, A, B
  • 3
    X, A, B, C
  • 4
    X, A, B, C, D
"Alternate Bat" tool progression at swing XA - overview

When only X and A rates are entered, both rates will be validated for errors only as there are no pattern conditions at this point.
If no errors found, the tool will be in "Proactive B" status, providing the proactive ideal rate and acceptable range for 38.2% XA retracement - from A.

"Alternate Bat" tool progression at point B - overview

When (X, A and B) rates are entered, B will be validated according to the pattern conditions for that point.
If B is found valid, the tool will be in "Proactive C" status, providing proactive ideal rates and acceptable ranges for (38.2%, 50.0%, 61.8%, 78.6%, and 88.6%) AB retracements - from B.

"Alternate Bat" tool progression at point C - overview

When (X, A, B and C) rates are entered, C will be validated according to the pattern conditions for that point.
If C is found valid, the tool will be in "Proactive PRZ" status, providing proactive ideal rates for the PRZ components (XA extension - from A, BC projection - from C, and AB=CD), and the acceptable range around the PRZ.

"Alternate Bat" tool progression at point D - overview

When (X, A, B, C and D) rates are entered, D will be validated according to the PRZ conditions of the pattern.
Whether the pattern is found valid or not, it can be saved or traded at this phase as per your preference.

XA SWING

"Alternate Bat" tool progression at XA swing

alternate bat tool progression at XA swing

Defining rates for (X & A) points will initiate the tool, the rates will only be checked for errors since there is no actual validation conditions for this swing.

POINT B

In a Harmonic Alternate Bat pattern, point B can only be a 38.2% XA retracement - from A.

For this point, deviation entered in the path setup will be calculated with respect to XA swing.

Point B can either be in proactive or validation status, both explained below using the example Alternate Bat pattern.

"Alternate Bat" tool progression at proactive point B

alternate bat tool progression at proactive point B

PROACTIVE STATUS

When only (X & A) points are defined, point B will be in proactive status.

The ideal rate for point B will be generated, and the acceptable range around it with respect to the deviation value entered in the path setup.

Obviously, AB swing is never traded, but knowing the possible range for point B in advance provides the ability to observe the price action around it and watch the pattern evolve from its very first phase.

"Alternate Bat" tool progression at validation of point B

alternate bat tool progression at validation of point B

VALIDATION STATUS

When (X, A & B) are defined, point B will be in validation status.

Validation will take place according to the validation method chosen in the pattern settings, and deviation value entered in the path setup.

Precision of point B is calculated with respect to the ideal rate of 38.2% XA retracement - from A.

If point B is found valid, the pattern progression will continue to the next phase "Proactive C", otherwise the pattern will be marked as invalid in the watch window.

POINT C

In a Harmonic Alternate Bat pattern, point C can be a (38.2%, 50.0%, 61.8%, 78.6%, or 88.6%) AB retracement - from B.

For this point, deviation entered in the path setup will be calculated with respect to AB swing.

There are two validation methods available for this point, either "Fibonacci levels only" or "Whole Fibonacci range", more on that in the settings section below.

Point C can either be in proactive or validation status, both explained below using the example Alternate Bat pattern.

"Alternate Bat" tool progression at proactive point C

alternate bat tool progression at proactive point C

PROACTIVE STATUS

When (X, A, and B) points are defined and point B is marked valid, point C will be in proactive status.

The ideal rate for each of the 5 possible retracements will be generated, and the acceptable range around each of them with respect to the deviation value entered in the path setup and validation method chosen.

Although at this point there is one Fibonacci relation already formed at point B, BC swing isn't a swing to be traded due to the fact that there is no target to aim for. There are 5 different possible reversal points for point C, so just like AB swing, proactive ideal rates and ranges are provided so a trader can continue observing the pattern progression and watch the price action as the pattern evolves.

"Alternate Bat" tool progression at validation of point C

alternate bat tool progression at validation of point C

VALIDATION STATUS

When (X, A, B and C) points are defined and point B is marked valid, point C will be in validation status.

Validation will take place according to the validation method chosen in the pattern settings, and deviation value entered in the path setup.

Precision of point C is calculated with respect to the nearest ideal rate of AB retracement - from B.

If point C is found valid, pattern progression will continue to the next phase "Proactive PRZ", otherwise the pattern will be marked as invalid in the watch window.

CD swing is sometimes traded by the more aggressive traders (entering the market when they believe C point is formed, with the PRZ being the target and stop loss beyond rate of point C). The tool doesn't calculate CD swing trades, however for aggressive traders who want that kind of trades, the proactive PRZ data can be helpful in defining a target.

A pattern can be saved at this point, it will be saved using only (X, A, B, and C) points.

POINT D (PRZ)

In a Harmonic Alternate Bat pattern, reversal is expected to occure within the potential reversal zone(PRZ), that PRZ consists of three Fibonacci relations, where one of them is the critical relation, and the other two relations are complementing that critical one.

PRZ is specified by the highest and lowest rates of the following PRZ relations:

  • Critical relation: 112.9% XA extension - from A
  • Complementary relation 1: (261.8%, 314.4%, or 361.8%) BC projection - from C
  • Complementary relation 2: (200.0%, 224.2%, or 261.8%) AB=CD

For the PRZ, deviation entered in the path setup will be calculated with respect to XA swing, the swing originating the critical relation. Acceptable deviation will be added on both ends of the PRZ.

The PRZ can either be in proactive or validation status, both explained below using the example Alternate Bat pattern.

"Alternate Bat" tool progression at proactive PRZ

alternate bat tool progression at proactive PRZ

PROACTIVE STATUS

When (X, A, B, and C) points are defined and point C is marked valid, the PRZ will be in proactive status.

The ideal rate for each of the 3 PRZ components will be generated, and the acceptable range around the PRZ with respect to the deviation entered in the path setup.

The size of the PRZ in relation to the pattern formation is generated, this can be helpful in deciding the quality of the pattern.

With having all the data for a possible point D, observing the price action in this phase is very important as the pattern is heading towards it's final phase.

The "take trade" option is enabled at this phase. If not overriden, the entry rate sent to the "Custom Trade" trading tool will be the critical relation's rate.

"Alternate Bat" tool progression at validation of PRZ

alternate bat tool progression at validation of PRZ

VALIDATION STATUS

When (X, A ,B ,C and D) are defined, the whole pattern is complete and it will be marked in the watch window as "Pattern complete" if rate of point D is within the acceptable PRZ range, or "Invalid" if it out of that range.

Validation will take place according to the acceptable PRZ range, with respect to deviation value specified in the path setup.

Precision of point D is generated with respect to ideal rate of the critical relation (112.9% XA extension - from A).

Whether a pattern is valid or not, it can be saved or traded at this phase.

This pattern was traded in the previous phase "Proactive PRZ" and all the screenshots except this one was taken at that phase. Adding the rate of point D after entering the trade can be useful in recalculating and adjusting take profit rate according to actual rate point D (1.32273 in our example).

TOOL'S SETTINGS

"Alternate Bat" tool settings

tool's settings

Settings to fine-tune the tool

There are 3 settings available for this tool covering validation method for point C, take profit targets, and stop loss safety. Those settings can be used to tailor the tool exactly around a certain forex trading style for Alternate Bat patterns.

C VALIDATION

"Alternate Bat" tool setting for point C - Fibonacci level only

alternate bat tool setting for point C - Fibonacci level only

FIBONACCI LEVELS ONLY

This is the default validation method for point C used by the tool, it marks the point as valid only if it falls within one of the acceptable ranges around each of (38.2%, 50.0%, 61.8%, 78.6%, and 88.6%) AB retracement - from B.

Each retracement's range is specified by adding the deviation percentage entered in the path setup to both sides of the ideal percentage of that retracement.

For example, if deviation is set to 1.000%, point C will be marked valid only if its actual rate falls between any of the following AB retracement ranges (37.2%~39.2%, 49.0%~51.0%, 60.8%~62.8%, 77.6%~79.6%, 87.6%~89.6%).

"Alternate Bat" tool setting for point C - Whole Fibonacci range

alternate bat tool setting for point C - Whole Fibonacci range

WHOLE FIBONACCI RANGE

When this setting is enabled, point C is marked valid only if it falls within the range created by the highest and lowest AB retracements - from B.

This range is specified by adding the deviation percentage entered in the path setup around both ends of the range (38.2% to 88.6%).

For example, if the deviation is set to 1.000%, point C will only be marked valid if its actual rate is between (37.2% to 89.6%) AB retracements - from B.

TAKE PROFIT TARGETS

"Alternate Bat" tool setting for targets: 38.2% and 61.8% of CD

alternate bat tool setting for targets: 38.2% and 61.8% of CD

RETRACEMENT OF CD (38.2% and 61.8%)

This is the default targets setting used by the tool, both targets will be calculated with respect to CD, where T1 will be 38.2% of CD and T2 will be 61.8% of CD.

"Alternate Bat" tool setting for targets: 61.8% and 100.0% of CD

alternate bat tool setting for targets: 61.8% and 100.0% of CD

RETRACEMENT OF CD (61.8% and 100.0%)

When this setting is enabled, both targets will be calculated with respect to CD, where T1 will be 61.8% of CD and T2 will be 100.0% of CD.

"Alternate Bat" tool setting for targets: 38.2% and 61.8% of AD

alternate bat tool setting for targets: 38.2% and 61.8% of AD

RETRACEMENT OF AD (38.2% and 61.8%)

When this setting is enabled, both targets will be calculated with respect to AD, where T1 will be 38.2% of AD and T2 will be 61.8% of AD.

STOP LOSS SAFETY

"Alternate Bat" tool setting for stop loss safety

alternate bat tool setting for stop loss safety

This setting will determine how the stop loss rate is calculated, in a Harmonic Alternate Bat pattern the absolute stop loss threshold is the rate 141.4% XA extension - from X.

It is better to give the pattern some room to breathe beyond that rate in case of a false break, that breathing area "safety zone" can be specified by either entering the pip distance to add beyond (141.4% XA extension - from A), or by entering a percentage of XA swing (which is the origin of the critical relation) to be used as the safety distance beyond (141.4% XA extension - from A).

For example, to set the stop loss rate to be further away beyond the absolute stop loss, entering 20.4% and choosing (% of XA) option will result in stop loss rate being calculated as 161.8% XA extension - from A.

The default setting used by the tool is (10.0% of XA).

TRADING AN ALTERNATE BAT PATTERN

"Alternate Bat" tool - trading a pattern

alternate bat tool - trading a pattern

The ability to send a pattern to "Custom Trade" tool is enabled as soon as point C is marked valid.

When "take trade" button is pressed, the pattern will be automatically saved and the trade setup will be sent as it is to the "Custom Trade" tool to generate the size of the trade according to the active checkpoint's thresholds.

The trading tool will have an active harmonic link, so that when a trade is activated and/or closed, it will be referenced by the harmonic pattern that initiated that trade setup.

Entry, take profit, and stop loss rates sent are dynamic and will be generated according to the settings of the tool, the phase of the pattern, and the active options in the "trade pattern" section.

  • ENTRY RATE
    • If point D isn't yet specified (Proactive PRZ status), the critical relation's rate will be used
    • If point D is specified, its rate will be used
    • If override is enabled, the rate entered will be used, which is the case in our example where we used BC Projection for entry rate
  • TAKE PROFIT
    • Either T1 or T2 will be sent as take profit rate, both are calculated according to the chosen pattern settings.
  • STOP LOSS
    • The stop loss rate to be sent will be calculated according to the chosen pattern settings.

SAVING AN ALTERNATE BAT PATTERN

Saving an Alternate Bat pattern can be done either in the phase of a valid point C (proactive PRZ status), or when the pattern is fully completed.

The pattern will be saved with respect to the currency preset and pattern settings at the time of saving, therefore all of the (points' rates, targets and stop loss, points relations) will be saved exactly as seen in the tool.

"Alternate Bat" tool - saving a pattern

alternate bat tool - saving a pattern

TRACKING DETAILS
PAIR

Currency pair of the pattern & chart time frame

DATE

Day of pattern initiation

X

Timestamp of the candle respresenting point X

OUTPUT

First hit after point D (T1, T2, SL, NA)

THE PATTERN IN HISTORY TOOL

Click the image above to see a native resolution screenshot for "Harmonic Patterns" history tool, showing the Alternate Bat pattern used for demonstrating the tool after saving.