Deep Crab Pattern™

“The Deep Crab pattern evolved from two patterns—invalid Bat patterns and a specific type of Crab pattern—that I developed as a further refinement of the basic structure. 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 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 projection. Another difference in the Deep Crab pattern is the AB=CD structure. The AB=CD pattern is a more important consideration in the Deep Crab, although the structure typically possesses the 1.27AB=CD alternate variation. However, it is common for these structures to possess equivalent AB=CD patterns in certain circumstances.”

Harmonic Trading: Volume One Page 136
(Copyright Scott M. Carney 2010 Financial Times Press)

The Deep Crab Pattern™, is a Harmonic pattern™ discovered by Scott Carney in 2001.

The critical aspect of this pattern is the tight Potential Reversal Zone created by the 1.618 of the XA leg and an extreme (2.24, 2.618, 3.14, 3.618) projection of the BC leg but employs an 0.886 retracement at the B point unlike the regular version that utilizes a 0.382-0.618 at the mid-point. The pattern requires a very small stop loss and usually volatile price action in the Potential Reversal Zone.

Bearish

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