The Deep Crab pattern is the combination of a Bat pattern and Crab pattern. There are some differences between Deep Crab and Crab. In Deep Crab formation, B point is at 0.886 retracement of XA; AB=CD is more important in the Deep Crab although the pattern often possesses the alternate 1.27AB=CD or 1.618AB=CD; BC Projection is less extreme with a minimum of 2.24.
• B point that is a 0.886 retracement of XA. In most cases, B point might exceeds 0.886 retracement. As long as B point doesn’t exceeds X point, the pattern is still valid.
• Extreme BC projection that is typically a 2.24, 2.618, 3.14, or 3.618.
• AB=CD or Alternate 1.27 or 1.618 AB=CD.
• 1.618 XA projection as the defining limit with the structure.
• C point with range between 0.382 and 0.886
3 elements define PRZ:
- 1.618 XA projection (the most important)
- Extreme BC projection
- AB=CD or Alternate AB=CD- In the Crab
1) Bullish Deep Crab
Figure 1 shows a Deep Crab pattern which possesses B point exceeding 0.886 retracement. However, B point hasn’t exceeded X hence the pattern is still valid. 2.24 BC Projection, CD=1.27AB and 1.618 XA Projection define a very compact PRZ. The weak non-farm payroll data sends the USD/JPY down right into the PRZ. Despite that weakness, the greenback has been able to hold off the selling pressure, creating a small double bottom and rally.
2)Bearish Deep Crab
Figure 2 shows a distinct Deep Crab pattern. 1.618AB=CD, 1.618 XA projection and 2.24 BC projection clearly define a PRZ for the Nasdaq_100 Daily chart. At the time writing this article in 2015, this pattern is providing a major resistance and a perfect opportunity to sell. It is very important for traders to see the price action in a timely and most relevant pattern as price reacts differently to the PRZ now compared to 10 years ago.
If you have been practicing to identify harmonic pattern, Deep Crab is not hard to spot on the chart especially after a Bat pattern. Deep Crab pattern is a powerful setup which should be exploited in everyday trading.
To see more examples, have a look at our collection here!