Harmonic Trading. The Crab Pattern

The Crab is a precise harmonic pattern with a distinct 5-point extension structure. The Crab pattern possesses a distinct structure with an extended final leg. It is common for price action to become extreme as the pattern approaches its completion point.

Pattern description

Crab pattern elements include:

• B point that is a 0.618 retracement of XA or less.
• Extreme BC projection is typically a 2.618, 3.14, or 3.618.
• Alternate 1.27 or 1.618 AB=CD pattern required.
• 1.618 XA projection as the defining limit with the structure.
• C point with a range between 0.382 and 0.886.

The pattern uses a 1.618 projection of the XA leg exclusively. This is the most critical aspect of the pattern and the defining level in the Potential Reversal Zone (PRZ). The Extreme (2.618, 3.14, 3.618) projection of the BC complements the 1.618 XA extension.

In addition, the Crab primarily utilizes an Alternate AB=CD to complement the PRZ.

Although a Minimum AB=CD completion is necessary for a valid structure, the Alternate 1.27 or 1.618.

Calculations are the most commonly found variations in the PRZ. In fact, the 1.618 AB=CD pattern is the most common alternate calculation utilized in the structure.

Again, it is best to wait for the 1.618 XA extension to be tested, but the BC projection should be a significant consideration and a minimum price level within the PRZ. In addition, the Alternate 1.27 or 1.618 AB=CD should complement this area.

The Deep Crab pattern

The Deep Crab is similar to the original Crab pattern, as it is a 5-point extension structure that utilizes exclusively a 1.618 XA projection for the defining level in the Potential Reversal Zone (PRZ).

The Deep Crab pattern evolved from two patterns—invalid Bat patterns and a specific type of Crab pattern—that developed as a further refinement of the basic structure. 

The difference can be found at the B point which must be an 0.886 retracement. In fact, the Deep Crab pattern usually possesses a B point that is beyond the 0.886 level but it does not violate the initial point (X).

The 0.886 B point requirement is special to the Deep Crab. When the structure is in the midst of completing the CD leg, the violation of the B point AND the X point typically creates a situation of severe price action. In essence, the price action is violating two important prior support or resistance points. When this happens, the result is frequently a sharp move that quickly extends to the 1.618 XA.

The Deep Bullish Crab is a distinct structure that is defined by the 0.886 B point retracement of the XA leg The 1.618 XA leg should be the lowest point in the PRZ and the defining limit in the completion of the pattern. The pattern usually possesses some type of Alternate Bullish AB=CD that requires either a 1.27 or 1.618 calculation.

The Perfect Crab pattern

The Crab pattern is defined by a 0.618 B point retracement, a 1.618 XA projection, and a 3.14 BC projection. The perfect Crab represents a unique structure and an incredibly precise pattern: precise 0.618 B point retracement of the XA leg, 3.14 BC projection, 3.1.618 AB=CD, and C point within a 50–61.8% range.

The Crab Pattern Summary

Although the structural variations of the Crab may seem to define the same pattern, the alignment of Fibonacci ratios clearly differentiates each type as a unique situation. 

The Crab typically defines extreme overbought and oversold situations, as the 1.618 XA leg is the most important Fibonacci measurement of the pattern and it represents the most critical number in the Potential Reversal Zone (PRZ). 

Unlike the other patterns, the AB=CD is not as critical at the completion point. Although it is important to differentiate the AB=CD possibilities for each variation, the Alternate 1.618 AB=CD pattern is the preferred structure in most Crab patterns. 

However, the 1.27 AB=CD pattern is typically found in the original version, while it is not unusual for the Deep Crab to possess an equivalent AB=CD. The extreme BC projection—usually a 2.618, 3.14, or 3.618 extension—underscores the nature of this structure. Although the Deep Crab permits a wider range of BC possibilities, this projection should converge closely with the 1.618 XA.

• Precise 0.618 B point retracement or less of the XA leg. (0.382 and 0.50 are common B points in the structure.) 
• Extreme 2.618, 3.14 or 3.618BC projection. (Sometimes 2.24 BC projections form in the structure.)
• Minimum AB=CD completion.
• Alternate 1.27 AB=CD or 1.618 AB=CD patterns are most common.
• C point retracement can vary between a 0.382 and 0.886.
• This is an extreme pattern!

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