The Crab pattern is a harmonic trading pattern that aims to identify potential reversal zones in the

market. It is named after its resemblance to the sideways movement and shape of a crab. The Crab
pattern was introduced by Scott Carney, a prominent figure in harmonic trading.

The Crab pattern, like other harmonic patterns, is based on specific Fibonacci retracement and
extension levels. The key Fibonacci ratios used in the Crab pattern are 0.382, 0.618, 1.618, and 2.618.
This pattern is considered one of the more advanced harmonic patterns due to its structure and the
ratios involved.

Here are the main characteristics of the Crab pattern:

1. XA Leg: The pattern begins with the XA leg, which represents the initial price swing. It can be an
uptrend or a downtrend and serves as the starting point for identifying the pattern.

2. AB Leg: The AB leg is a retracement of the XA leg. It typically retraces a portion of the XA leg and
ends at the 0.382 or 0.618 Fibonacci retracement level. This retracement level is critical in
recognizing the potential Crab pattern.

3. BC Leg: The BC leg is an extension of the AB leg. It continues the price movement beyond the XA
leg and usually reaches the 1.618 or 2.618 Fibonacci extension level of the AB leg. The BC leg is
typically the longest among the price swings in the pattern.

4. CD Leg: The CD leg is the final leg of the pattern and represents the reversal back in the direction
of the original XA leg. It retraces a portion of the BC leg and typically terminates at the 0.382 or 0.618
Fibonacci retracement level of the XA leg. The CD leg should be roughly equal in length to the AB leg.

When the Crab pattern completes, it suggests a potential reversal zone where traders may consider
entering trades. The pattern implies that the price is likely to reverse and continue in the direction of
the initial XA leg. Traders often use additional technical analysis tools, such as support and resistance
levels, trendlines, and indicators, to validate the Crab pattern and make informed trading decisions.

It's important to note that not all Crab patterns will result in successful trades. Risk management
techniques, such as setting appropriate stop-loss orders and take-profit levels, are crucial to protect
capital and optimize trade outcomes. Combining the Crab pattern with other technical analysis
methods can further enhance the accuracy and reliability of trading signals.