What it means
The Crab is the most extended common harmonic: B retraces 0.382–0.618 of XA and D completes at 1.618 of XA, far beyond X.
It targets the climax of a sharp move.
Why traders use it
Scott Carney introduced the Crab in 2000. The idea is that after a very extended final leg, the reaction can be sharp; the 1.618 extension defines where to look.
Chart examples
Bullish Crab
How to identify it objectively
- 1XA impulse.
- 2B: 0.382–0.618 of XA.
- 3C: 0.382–0.886 of AB.
- 4D: 1.618 of XA.
Bullish use
- 1D at 1.618 of XA below X.
- 2Bullish reversal close at D.
- 3Stop below D by a fixed buffer.
Bearish use
- 1D at 1.618 of XA above X.
- 2Bearish reversal close at D.
- 3Stop above D.
What confirms it
- A climactic final leg into D.
- A strong reversal close.
What invalidates it
- Price keeps closing beyond D.
How a hypothetical setup is built
Entry
At D after a reversal close.
Stop
Beyond D by a fixed buffer (for example 0.5× ATR).
Target
0.382 then 0.618 of AD.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
Historical testing
Not tested on The Tradeskill. In the drawing XA = 10 points: B = 103.82 (0.618), C = 107.64, D = 93.82 (1.618 of XA below A).
Limitations: when it fails
- Catching the end of a sharp move is risky.
- Strong trends run through 1.618.
- No proven edge from the ratios alone.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.