Harmonic pattern traders use the Deep Crab Pattern to anticipate price reversals. By calculating and identifying points B, A, X, and C using Fibonacci ratios, it's possible to forecast the potential D point and use it as an area for trade entry or exit.
What Is the Deep Crab Pattern?
The Deep Crab Pattern is a reversal pattern in technical analysis that uses Fibonacci ratios to identify price turning points. While it functions similarly to the standard crab pattern, its key distinction lies in the level of B point retracement relative to X.
In the Deep Crab Harmonic Pattern, the B point must retrace 88.6% of the XA leg, whereas in a standard crab pattern, this ratio ranges between 38.2% and 61.8%. This pattern typically forms at the end of trends.
To identify this pattern, don’t insist too rigidly on exact Fibonacci levels. Be flexible with prices hovering near key levels to avoid missing trading opportunities based on this pattern.
Pros and Cons of the Deep Crab Pattern
Using the Deep Crab Harmonic Pattern provides traders with very favorable risk-to-reward ratios (R:R). However, like all patterns, it comes with both advantages and disadvantages.
Pros and Cons of the Deep Crab Harmonic Pattern:
Pros | Cons |
Defines accurate entry and exit levels | Requires experience and skill |
Uses Fibonacci levels for confirmation | Needs confirmation from other indicators/tools |
Usable across various financial markets | Prone to misidentification |
How to Identify the Deep Crab Pattern on a Chart?
The Deep Crab harmonic pattern structure is identified by five key points including X, A, B, C, and D; It adheres to specific Fibonacci ratios.
Key Ratios for Identifying the Deep Crab Pattern:
- Point B must retrace 88.6% of XA;
- The BC leg may extend 2.24 to 3.618 times the AB leg;
- The CD leg is typically 1.618 times XA or 2.24 to 3.618 times BC.
To identify the Deep Crab Harmonic pattern faster and more efficiently, you can use the powerful tools provided by TradingFinder:
- Deep Crab Harmonic Pattern Indicatoron TradingView
- Download Deep Crab Harmonic Pattern Indicator for MetaTrader 5
- Download Deep Crab Harmonic Pattern Indicatorfor MetaTrader 4
How to Trade Using the Deep Crab Pattern?
Once the Deep Crab structure is confirmed, mark points X, A, B, C, and D. The D point represents a potential reversal zone. Upon candlestick confirmation at point D, the trade can be initiated.
The stop-loss is placed below point D, and the take-profit is usually set at Fibonacci retracement levels or key support and resistance zones.
Conclusion
The Deep Crab Harmonic Pattern is rarely observed on charts, and manually detecting it according to all its rules may cause traders to miss profitable setups.
Therefore, it is recommended to use automatic pattern recognition tools for detecting the Deep Crab structure.
The only difference between the Deep Crab Pattern and the standard crab pattern lies in the B point retracement. This pattern can also be used in high risk-to-reward (R:R) trade setups.
