# What Is The Crab Pattern & How To Trade With It

The Crab is a type of Harmonic pattern that stretches at point D and defines a potential reversal. Developed by Scott Carney in 2001, it is one of the most precise Harmonic patterns considered by the author.

## What is the Crab pattern?

Like other Harmonic patterns, the Crab has a five-point structure—these points, known as legs, forms with the help of Fibonacci numbers and ratios.

The difference between Crab and other Harmonic patterns is that the PRZ (potential reversal zone) expands at the point D. This expansion reaches beyond the X leg. The PRZ is a region where three or more Fibonacci numbers converge and form the Harmonic pattern.

This is how the pattern looks like on the chart:

To identify the Crab, traders must know its calculations. They are:

• The AB leg retraces between 38.2% to 61.8%.
• BC retraces at 38.2% to 88.6% of the AB leg.
• CD extends up to 161.8% of XA and extends 224% to 316% of the AB leg.
• The pattern completes at point D, where traders take their positions.

The Crab looks similar to the Butterfly pattern. The difference lies in their measurements.

The Crab has one variation, which is called the Deep Crab pattern. The Deep Crab evolves from the Crab and the invalid Bat patterns. Though the Deep Crab looks identical to the Crab, the Deep Crab should retrace 0.886 at the B leg.

## How to use the Crab pattern?

To implement the Crab pattern, one must familiarize himself/herself with its bullish and bearish patterns.

### a. Bullish Crab pattern

The bullish Crab emerges in an uptrend and signals a price reversal at point D. Traders take their long positions at point D, and profit-targets are set at point CD.

### b. Bearish Crab pattern

The bearish Crab in the downtrend at identifies a price reversal at point D. Traders take short positions at point D and set their profit-targets at CD leg.

According to Scott Carney, the price action in the Crab is most extreme of all Harmonic patterns. This means its highly volatile. Besides this, there are no definite stop-losses. So, to place a stop-loss, one should look for the furthest projections. In other words, traders must wait for the highs and lows to be formed and set above/below these levels.

Sometimes the Crab can leave traders astray by giving false signals. This happens mostly on shorter timeframes. The best way to handle this issue is to wait for the Crab to fully appear, and take trading positons after point D.

The Crab pattern requires patience on the trader’s part, as it can take time to surface correctly. Traders may look for the Crab pattern on any timeframe according to their own individual trading needs.

• Locate the pattern in an uptrend.
• Wait for the price bar to go bullish before entering.
• Enter the trade at point D or after it.
• Set a stop-loss near the recent low.
• Exit the trade before the price drops.

### Crab pattern sell strategy

• Look for the pattern in a downtrend.
• Wait for the price bar to go bearish before entering.
• Enter the trade at point D or after it.
• Set a stop-loss near the recent high.
• Exit the trade before the price rises.

## Crab pattern conclusion

The Crab pattern does give entry and exit points, but it can be complicated for new traders. Traders may combine the Crab pattern with momentum oscillators to confirm the price reversal.

The Crab Pattern can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy.

I would prefer to use the majority of candlestick patterns such as the Crab Pattern on the 1-hour charts and above. I tend to find that these charts contain less market noise than the lower time frames and thus give more reliable signals for my forex trading strategies. This also means that I spend less time staring at charts and can also set alert notifications to let me know when price has reached certain levels, candlestick pattern has been formed or a particular indicator value has been reached.

The Crab Pattern is just one method of market analysis amongst thousands. I would not build a trading system alone, but rather combine with other technical indicators such as moving averages, Parabolic SAR, Stochastic Oscillator, RSI, ADX and price action analysis.

Of course, every trading system will generate false signals which is why money management is so important. I would personally be implementing sensible money management and only take traders that give me a favorable risk to reward ratio, ideally of at least 1:3. This means that one losing trade does not wipe out consecutive winners.

The methods of implementing the Crab Pattern into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.

Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.

If you would like to practice trading with the Crab Pattern, you can open an account with a forex broker and download a trading platform. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.