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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski’s Bearish Breakaway

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/21/2017
20,548 -30.95 -0.2%
9,134 7.68 0.1%
706 4.81 0.7%
5,911 -6.26 -0.1%
2,349 -7.15 -0.3%
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4.0%
1.0%
7.0%
9.8%
4.9%
Tom's Targets    Overview: 04/17/2017
20,100 or 21,150 by 05/01/2017
8,500 or 9,500 by 05/01/2017
725 or 685 by 05/01/2017
5,950 or 5,650 by 05/01/2017
2,275 or 2,425 by 05/01/2017
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The bearish breakaway candle is a five line pattern, a clue that it will be difficult to find. In fact, it has a frequency rank of 98 where 1 is prolific out of 103 candlestick types. It acts as a bearish reversal 63% of the time, ranking 23rd, which I consider good. In a bear market, though, it sports a reversal rate of 89%, ranking 2nd. The overall performance ranks 11th, which is also very good.

Important Results for Bearish Breakaway

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 63% of the time
Frequency rank: 98
Overall performance rank: 11
Best percentage meeting price target: 35% (bull market, down breakout)
Best average move in 10 days: 6.66% (bull market, up breakout)
Best 10-day performance rank: 2 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal bearish breakaway candlestick
Bearish Breakaway

Bearish Breakaway Discussion

Since the bearish breakaway candlestick is so rare (frequency rank of 98), I did not include performance statistics in my book, Encyclopedia of candlestick charts. I offer a few of them here.

The bearish breakaway acts as a bearish reversal 63% of th time, which is quite respectable. Overall performance ranks 11 where 1 is best out of 103 candlestick types. That is a very good score. Unfortunately, the candle tends to be a tall one, so price rarely hits the measure rule target. The target is based on the height of the candlestick pattern added to the upward breakout price or subtracted from the downward breakout price. Price hits the target just 35% of the time after a downward breakout in a bull market. And that represents the best performance, too. The best average move 10 days after the breakout is a rise of 6.66% where I consider moves above 6% as wonderful. The best performance rank is second, belonging to upward breakouts in a bear market.

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Bearish Breakaway Identification Guidelines

CharacteristicDiscussion
Number of candle linesFive.
Price trend leading to the patternUpward.
ConfigurationLook for 5 candle lines in an upward price trend with the first candle being a tall white one. The second day should be a white candle with a gap between the two bodies, but the shadows can overlap. Day three should have a higher close and the candle can be any color. Day 4 shows a white candle with a higher close. The last day is a tall black candle with a close within the gap between the bodies of the first two candles.

The bearish breakaway candlestick on the daily scale

Bearish Breakaway Example

Shown circled in red is one of the few bearish breakaway candlestick patterns that I could find. The first day is a tall white candle followed by another white candle with a gap between the two bodies. Days 3 and 4 are white candles, both of which have higher closes. The last day in the pattern is a tall black candle that closes within the gap set by the first two candles. Yes, this is a complicated pattern and that is why you won’t find it often.

When the bearish breakaway completes, the upward trend reverses and price breaks out downward. In this case, price does not drop all that far, at least for the days shown.

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. I took an IQ test and the results were negative.