Deep Crab Harmonic Pattern [TradingFinder] Reversal Zones

9 בספט׳

🔵Introduction

The Deep Crab pattern is a 5-point extension harmonic structure (X-A-B-C-D) used in technical analysis to identify potential reversal points in financial markets. Like the original Crab pattern, it heavily relies on a 1.618 XA projection to form the Potential Reversal Zone (PRZ).

However, the key difference lies in the B point, which must be an 0.886 retracement of the XA leg. The D point in this pattern typically extends beyond the X point, signaling a strong potential reversal in price movement.


Bullish Deep Crab:

The Bullish Deep Crab is a pattern used in technical analysis to spot potential trend reversals. It signals a shift from a downtrend to an uptrend. Traders enter a buy position at the D point and set a stop-loss below point X, anticipating a price increase.






Bearish Deep Crab:

The Bearish Deep Crab is a reversal pattern that indicates the potential end of an uptrend. Traders enter a sell position at point D and set a stop-loss above point X, expecting the price to fall afterward.






🟣Crab Vs Deep Crab

The Crab and Deep Crab patterns are both used to identify reversal points in technical analysis, but they differ in terms of correction depth:

• Crab: The B point retraces between 38.2% to 61.8% of the XA leg, and point D extends beyond X, indicating a price reversal after a smaller correction.
  
  
• Deep Crab: The B point retraces more deeply, around 88.6% of the XA leg, and point D has a stronger extension, signaling a reversal after a deeper correction.
  

The Deep Crab is more suited for identifying stronger price movements.



🔵How to Use

To effectively use the Deep Crab pattern, it’s essential to correctly identify its five key points (X, A, B, C, and D) based on Fibonacci retracements and extensions. Traders look for a deep retracement at point B, followed by an extended move to point D, which typically signals a strong price reversal.

Once these points are established, traders can strategically enter positions at point D with appropriate stop-loss and take-profit levels, capitalizing on the anticipated market reversal. Proper use of Fibonacci tools is crucial for accurate pattern identification.



🟣Bullish Deep Crab

To use the Bullish Deep Crab pattern, a trader identifies point D as the key price reversal point in a downtrend. Using Fibonacci tools, points X, A, B, and C are identified, with point B showing an 88.6% retracement of XA, and CD extending 1.618% of XA.

The trader enters a buy position at point D and sets a stop-loss below X, expecting a reversal from a downtrend to an uptrend.






🟣Bearish Deep Crab

In the Bearish Deep Crab pattern, point D acts as the reversal point in an uptrend. After identifying points X, A, B, and C, D extends 1.618% of XA. Point B retraces 88.6% of XA. Traders enter a sell position at point D and place a stop-loss above X, anticipating a drop in price.






🔵Setting


🟣Logical Setting

ZigZag Pivot Period: You can adjust the period so that the harmonic patterns are adjusted according to the pivot period you want. This factor is the most important parameter in pattern recognition.

Show Valid Format: If this parameter is on "On" mode, only patterns will be displayed that they have exact format and no noise can be seen in them. If "Off" is, the patterns displayed that maybe are noisy and do not exactly correspond to the original pattern.





Show Formation Last Pivot Confirm: if Turned on, you can see this ability of patterns when their last pivot is formed. If this feature is off, it will see the patterns as soon as they are formed. The advantage of this option being clear is less formation of fielded patterns, and it is accompanied by the latest pattern seeing and a sharp reduction in reward to risk.

Period of Formation Last Pivot: Using this parameter you can determine that the last pivot is based on Pivot period.





🟣Genaral Setting


Show: Enter "On" to display the template and "Off" to not display the template.
Color: Enter the desired color to draw the pattern in this parameter.
LineWidth: You can enter the number 1 or numbers higher than one to adjust the thickness of the drawing lines. This number must be an integer and increases with increasing thickness.
LabelSize: You can adjust the size of the labels by using the "size.auto", "size.tiny", "size.smal", "size.normal", "size.large" or "size.huge" entries.



🟣Alert Setting

Alert: On / Off

Message Frequency: This string parameter defines the announcement frequency. Choices include: "All" (activates the alert every time the function is called), "Once Per Bar" (activates the alert only on the first call within the bar), and "Once Per Bar Close" (the alert is activated only by a call at the last script execution of the real-time bar upon closing). The default setting is "Once per Bar".

Show Alert Time by Time Zone: The date, hour, and minute you receive in alert messages can be based on any time zone you choose. For example, if you want New York time, you should enter "UTC-4". This input is set to the time zone "UTC" by default.



🔵Conclusion

The Deep Crab pattern is a valuable reversal tool in technical analysis, known for its deep retracement and extended price movements.

Unlike other harmonic patterns, it emphasizes identifying critical points where price action is likely to reverse sharply. This pattern works well in both bullish and bearish market scenarios, offering clear signals for entry and exit points.

However, successful application requires a deep understanding of market behavior and precise use of technical tools like Fibonacci retracement. Overall, mastering this pattern can enhance trading strategies and risk management.