As of 04/21/2021
  Indus: 34,137 +316.01 +0.9%  
  Trans: 15,040 +145.39 +1.0%  
  Utils: 927 -6.07 -0.7%  
  Nasdaq: 13,950 +163.95 +1.2%  
  S&P 500: 4,173 +38.48 +0.9%  
YTD
 +11.5%  
 +20.3%  
 +7.2%  
 +8.2%  
 +11.1%  
  Targets    Overview: 04/15/2021  
  Up arrow34,800 or 32,900 by 05/01/2021
  Up arrow15,200 or 14,000 by 05/01/2021
  Up arrow950 or 885 by 05/01/2021
  Up arrow15,000 or 12,900 by 05/01/2021
  Up arrow4,400 or 3,900 by 05/01/2021
CPI (updated daily): Arrows on 3/25/21
As of 04/21/2021
  Indus: 34,137 +316.01 +0.9%  
  Trans: 15,040 +145.39 +1.0%  
  Utils: 927 -6.07 -0.7%  
  Nasdaq: 13,950 +163.95 +1.2%  
  S&P 500: 4,173 +38.48 +0.9%  
YTD
 +11.5%  
 +20.3%  
 +7.2%  
 +8.2%  
 +11.1%  
  Targets    Overview: 04/15/2021  
  Up arrow34,800 or 32,900 by 05/01/2021
  Up arrow15,200 or 14,000 by 05/01/2021
  Up arrow950 or 885 by 05/01/2021
  Up arrow15,000 or 12,900 by 05/01/2021
  Up arrow4,400 or 3,900 by 05/01/2021
CPI (updated daily): Arrows on 3/25/21

Bulkowski on Busted Performance

 

Statistics updated on 12/29/2020.

The third edition of this book Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns. has a table in most chapters discussing busted pattern performance.

$ $ $

This article compares the performance of busted patterns with themselves and their non-busted counterparts. If you don't understand what a busted pattern in, consult the glossary.

How Often Do Chart Patterns Bust?

Table 1: Frequency of Busted Chart Patterns in Bull Markets
as a Percentage of All Patterns
Busted Chart PatternBusted Up
 Breakouts 
 Busted Down
Breakouts 
Big M38%
Big W18%
Broadening bottom25%42%
Broadening formation, right-angled and ascending26%48%
Broadening formation, right-angled and descending29%43%
Broadening top29%47%
Broadening wedge, ascending19%42%
Broadening wedge, descending21%47%
Bump and run reversal, bottom12%
Bump and run reversal, top22%
Cup with handle10%
Cup with handle, inverted29%
Diamond bottom22%35%
Diamond top34%33%
Double bottom, Adam & Adam29%
Double bottom, Adam & Eve23%
Double bottom, Eve & Adam21%
Double bottom, Eve & Eve20%
Double top, Adam & Adam44%
Double top, Adam & Eve40%
Double top, Eve & Adam44%
Double top, Eve & Eve36%
Head-and-shoulders bottom16%
Head-and-shoulders, complex bottom12%
Head-and-shoulders top32%
Busted Chart PatternBusted Up
 Breakouts 
 Busted Down
Breakouts 
Head-and-shoulders, complex top29%
Island bottom33%
Island top39%
Rectangle bottom26%43%
Rectangle top26%51%
Roof32%39%
Roof, inverted35%36%
Scallop, ascending15%35%
Scallop, inverted and ascending17%
Scallop, descending24%31%
Scallop, descending and inverted20%28%
Three falling peaks35%
Three rising valleys14%
Triangles, ascending29%46%
Triangles, descending28%42%
Triangles, Symmetrical32%48%
Triple bottom23%
Triple top43%
V bottom30%
V top46%
Wedge, falling31%32%
Wedge, rising21%63%
Median24%40%
Busted Chart PatternBusted Up
 Breakouts 
 Busted Down
Breakouts 

Analysis

The above table shows how often a chart pattern busts as a percentage of all chart patterns of the same type and breakout direction, listed alphabetically. For example, I compared how often symmetrical triangles in bull markets with downward breakouts busted compared to those symmetricals that did not bust. Almost half (48%) of them busted. Upward breakouts did better, with 32% busting. Both numbers are alarming if you're not looking to trade a busted pattern. Price will move no more than 10% in the direction of the breakout before reversing. That doesn't give you much opportunity to profit.

For upward breakouts, inverted roofs bust most often, 35% of the time. For downward breakouts, rising wedges bust most often, at 63% of the time. Ouch!

Notice that downward breakouts bust more often than upward breakouts. That's true except for diamond tops which bust 34% of the time versus 33% of the time for upward and downward breakouts, respectively.

Cup with handles with upward breakouts bust the fewest number of times, 10%, but that's probably because they tend to be tall patterns with breakouts at the top of the pattern. Bump and run reversal tops busted the fewest number of times after downward breakouts. Those patterns are tall but the breakout is closer to the middle of the chart pattern.

Top of page More

When patterns bust, do they single, double or triple+ bust?

Of those chart patterns which bust, the table shows the frequency of each type of bust: single, double, or triple, sorted alphabetically by pattern name.

For example, when a Big M chart pattern busts, I found that 67% of them bust once, 2% double bust, and the remainder (31%) bust three or more times.

Table 2: Frequency of Single, Double, and Triple Busts
 Single
 Bust 
  Double
Bust 
  Triple+ 
Bust
 
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
Big M67%2%31%
Big W57%32%12%
Broadening bottom56%66%27%5%17%30%
Broadening formation, right-angled and ascending53%64%31%5%16%32%
Broadening formation, right-angled and descending49%69%31%3%21%27%
Broadening top50%66%33%3%17%30%
Broadening wedge, ascending59%83%33%3%8%14%
Broadening wedge, descending53%75%31%3%16%22%
Bump and run reversal, bottom59%32%9%
Bump and run reversal, top86%3%11%
Cup with handle64%26%9%
Cup with handle, inverted88%3%9%
Diamond bottom47%68%30%5%23%27%
Diamond top47%59%42%6%11%35%
Double bottom, Adam & Adam55%29%16%
Double bottom, Adam & Eve59%28%13%
Double bottom, Eve & Adam53%30%17%
Double bottom, Eve & Eve53%35%12%
Double top, Adam & Adam55%5%40%
Double top, Adam & Eve59%6%35%
Double top, Eve & Adam65%3%32%
Double top, Eve & Eve67%5%28%
Head-and-shoulders bottom47%36%17%
Head-and-shoulders, complex bottom57%28%15%
Head-and-shoulders top67%3%30%
 Single
 Bust 
  Double
Bust 
  Triple+ 
Bust
 
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
Head-and-shoulders, complex top63%5%32%
Island bottom38%36%25%
Island tops47%5%48%
Rectangle bottom49%66%28%1%23%32%
Rectangle top39%66%28%3%33%31%
Roof49%70%33%5%18%24%
Roof, inverted48%68%36%6%17%26%
Scallop, ascending60%77%33%4%8%19%
Scallop, inverted and ascending60%28%12%
Scallop, descending57%78%35%3%8%20%
Scallop, descending and inverted59%85%31%2%11%12%
Three falling peaks78%4%18%
Three rising valleys65%29%6%
Triangles, ascending50%67%34%5%16%29%
Triangles, descending45%71%33%5%23%24%
Triangles, Symmetrical46%67%33%6%22%28%
Triple bottom53%31%16%
Triple tops67%3%31%
V bottom74%22%4%
V top84%5%11%
Wedge, falling48%71%40%3%12%26%
Wedge, rising54%76%26%3%21%22%
Median53%67%31%4%16%28%
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
Up
 Breakout 
 Down
Breakout 
 Single
 Bust 
  Double
Bust 
  Triple+ 
Bust
 

Top of page More

Performance Compared to Non-Busted Patterns

Please note that the header in the two right columns have been switched from the prior tables.

The following table compares the performance of single busted patterns with the non-busted counterparts. For example, a broadening top with a downward breakout that single busts sees price rise an average of 55%. The same pattern with a non-busted upward breakout sees price rise 42%.

Another example: An Adam & Adam double bottom which single busts sees price drop an average of 27%. A double top with a non-busted downward breakout sees price drop just 15%. Notice that I'm comparing a busted double bottom with a regular double top.

The trick in comparing these numbers is that the busted pattern busts just once. In actual trading, it might bust multiple times. The second table will give you a sense of how often patterns single, double, and triple bust.

Table 3: Performance of Single Busted versus Non-Busted Chart Patterns in Bull Markets, Sorted Alphabetically
Single-BustedNon-Busted
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Down
 Breakout 
 Up
Breakout 
Big M55%46%
Big W23%17%
Broadening bottom24%46%15%45%
Broadening formation, right-angled and ascending23%49%14%43%
Broadening formation, right-angled and descending22%60%15%43%
Broadening top22%55%13%42%
Broadening wedge, ascending19%49%12%41%
Broadening wedge, descending22%65%13%39%
Bump and run reversal, bottom19%
Bump and run reversal, top55%
Cup with handle21%
Cup with handle, inverted53%
Diamond bottom19%48%19%39%
Diamond top22%58%17%29%
Double bottom, Adam & Adam27%15%
Double bottom, Adam & Eve24%16%
Double bottom, Eve & Adam25%15%
Double bottom, Eve & Eve23%16%
Double top, Adam & Adam37%39%
Double top, Adam & Eve52%43%
Double top, Eve & Adam51%42%
Double top, Eve & Eve54%50%
Head-and-shoulders bottom22%16%
Head-and-shoulders, complex bottom21%17%
Head-and-shoulders top67%45%
Single-BustedNon-Busted
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Down
 Breakout 
 Up
Breakout 
Head-and-shoulders, complex top50%47%
Island bottom21%13%
Island tops42%31%
Rectangle bottom27%68%16%48%
Rectangle top22%71%13%51%
Roof25%49%15%34%
Roof, inverted18%61%14%34%
Scallop, ascending21%48%15%42%
Scallop, inverted and ascending21%15%
Scallop, descending20%54%16%39%
Scallop, descending and inverted18%52%16%47%
Three falling peaks40%49%
Three rising valleys15%20%
Triangles, ascending22%51%13%43%
Triangles, descending26%54%15%38%
Triangles, Symmetrical23%52%12%34%
Triple bottom23%14%
Triple tops60%46%
V bottom22%15%
V top48%40%
Wedge, falling21%53%14%38%
Wedge, rising23%56%9%38%
Median23%53%15%42%
Single-BustedNon-Busted
Busted Chart PatternUp
 Breakout 
 Down
Breakout 
Down
 Breakout 
 Up
Breakout 

Top of page More

-- Thomas Bulkowski

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Trading Classic Chart Patterns

Copyright © 2005-2021 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.

Home Advertise Contact Donate Links Privacy/Disclaimer

No matter how cynical you become, it's never enough to keep up. -- Lily TomlinSmiley