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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 Busted Symmetrical Triangles

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Busted
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Market
Industrials (^DJI):
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As of 02/27/2017
20,837 15.68 0.1%
9,474 52.57 0.6%
696 -3.49 -0.5%
5,862 16.59 0.3%
2,370 2.39 0.1%
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5.5%
8.9%
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21,150 or 20,000 by 03/15/2017
8,800 or 9,700 by 03/01/2017
700 or 640 by 03/01/2017
5,950 or 5,650 by 03/01/2017
2,400 or 2,260 by 03/01/2017
Indus strength: None YTD
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Mutt Winners: None YTD

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Information on busted chart patterns is discussed in my book, Visual Guide to Chart PatternsVisual Guide to Chart Patterns book.. You can find information in the book in Chapter 22: "Busted Pattern Buy Setups" (starting on page 229) and in Chapter 25, "Busted Pattern Sell Signals" starting on page 271.

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Busted Symmetrical Triangle Summary

Price can breakout of a symmetrical triangle in any direction. When price moves less than 10%, reverses direction, and closes beyond the side opposite the breakout, it busts the chart pattern. For testing and safety, I used the top and bottom of the triangle as the price where a stock busts the triangle, not a trendline break. However, the first breakout still uses a trendline break.

Symmetrical triangles bust 30% of the time in bull (23%) and bear markets (7%). Downward breakouts in a bull market tend to single bust slightly more often than those with upward breakouts, 8% versus 6%.

The average move after an upward breakout from a busted pattern (all busted types: 1, 2 and 3) is 10%, and for downward breakouts it is 28%.

You can use the trend start for selecting better performing busted triangles. See Additional Trading Tips for Busted Symmetrical Triangles.

Using moving averages such as the 50- and 200-day simple moving average does not significantly improve selecting a winner.

Single Busted Symmetrical Triangles

Picture of Albemarle (ALB) on the daily scale.

I show a chart of a single busted symmetrical triangle in Albemarle (ALB) on the daily scale. The symmetrical triangle is highlighted by red trendlines and price crosses the chart pattern from side to side, filling the white space and touching each trendline at least twice (five or more times for both trendlines, total, is best).

Price breaks out of the triangle at A and drops to B. That move (from breakout to low) is less than 10% before price moves back into the chart pattern, pierces the top and closes at C above the top of the triangle (shown by the horizontal green line). When that happens, it busts the symmetrical triangle for the first time. Price continues moving up at least 10%, to D, completing the single busted triangle.

For a single bust, look for:

  1. Price breaks out either upward or downward from an symmetrical triangle by closing outside of the trendline border. This occurs at A in the figure.
  2. Price must move less than 10% before reversing (the move from A to B).
  3. For upward breakouts, price then closes below the bottom of the symmetrical triangle. For downward breakouts, price closes above the top of the symmetrical triangle (C).
  4. Price continues moving in the new direction by at least 10% (the move up from the green line toward D).

For the last point, 4, if price fails to move more than 10%, then it could be forming a double busted symmetrical triangle.

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Double Busted Symmetrical Triangles

Picture of Tredegar (TG) on the daily scale.

The figure to the right shows an example of a double busted symmetrical triangle in Tredegar (TG).

The triangle appears between the red lines. Price pokes its head out the top of the triangle, but that is too early in the chart pattern's development to matter. The breakout comes at A when price closes outside the pattern trendline boundaries. Price rises to B and then reverses, plunging to C. The move from the breakout price at A to B is less than 10%.

When price closes below the bottom green line, it busts the pattern for the first time. The move from the bottom green line to C is less than 10%, so we keep counting the number of busts.

Price rebounds and moves up, closing above the top green line, busting the triangle for the second time. The move isn't over. It climbs to D, moving higher more than 10% above the top green line. That move (over 10%) ends the search for the busted count. Thus, this pattern is a double busted triangle.

For a double bust, look for these elements.

  1. Price busts a confirmed symmetrical triangle for the first time (point C in this figure).
  2. Price must move less than 10% before reversing (the drop from the bottom green line to C).
  3. Price reverses direction again, closing either above the top or below the bottom of the triangle (The move from C to a close above the top trendline).
  4. Price moves at least 10% in the new direction. That is the move from the green line upward toward D.

If price fails to move at least 10% in the new direction, then it is a triple busted symmetrical triangle.

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Symmetrical Triangle, Triple Busts

Picture of Fresh Del Monte Produce (FDP) on the daily scale.

Fresh Del Monte Produce (FDP), pictured on the right, is an example of a triple busted symmetrical triangle.

The triangle is outlined in red on the left of the chart. Price closes above the down-sloping trendline at A, staging an upward breakout. Price drifts up to B, but that move is less than 10% from the breakout price. Then the stock drops to C, busting the triangle for the first time. The drop below the bottom green line at C is less than 10%.

Price moves up to D where it closes above the top green line (above the top of the triangle). This busts the triangle for the second time.

The move from the green line to D is less than 10% before price reverses.

Price drops to E. The drop is below the lower green line (the bottom of the triangle), busting it for the third time. If price were to continue dropping by 10% below the bottom green line, then the busting count would stop at three. This example continues to bust the triangle (not shown).

For a triple (or more) busted symmetrical triangle, look for the following:

  1. Find a double busted symmetrical triangle except that price fails to move more than 10% after the second bust (the up and down moves to D in this example).
  2. Price reverses direction again and closes below the bottom or above the top of the chart pattern, busting it for a third time (E).
  3. If price fails to move by 10% or more before reversing and closing on the opposite side of the symmetrical triangle, additional up and down busted cycles may continue.
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Methodology for Testing Busted Symmetrical Triangles

I found 2,931 symmetrical triangles in 974 stocks dating back as far as October 1990 to October 2011. Few stocks covered the entire period. All of the symmetrical triangles I found manually either using a historical search or real time (looking at my stocks each day). The real time additions prevented any look-ahead bias since I am not privy to future price movements.

I then used software to measure performance and flag busted chart patterns.

Gauging performance uses the same method as I used to catalog non-busted chart patterns. That is, the search for the new ultimate high or low proceeded as described in the glossary. Thus, the numbers reported in Busted Symmetrical Triangles Results (next section) should be considered perfect trades. Do not expect to duplicate the results in actual trading. The numbers should be used only for comparison purposes to other chart patterns.

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Busted Symmetrical Triangles Results

The following numbers are the results from perfect trades in bull markets, unless otherwise noted. Do not expect actual trading results to match those discussed below. Use the numbers only for comparison purposes with other chart patterns.

How often do symmetrical triangles bust?

Upward Breakouts

  • Single busts: 13% of the time.
  • Double busts: 9% of the time.
  • Three or more busts: 5% of the time.
  • All busted symmetrical triangles: 27% of the time.

Downward Breakouts

  • Single busts: 30% of the time.
  • Double busts: 7% of the time.
  • Three or more busts: 6% of the time.
  • All busted symmetrical triangles: 42% of the time.

Of busted symmetrical triangles, what is the frequency distribution?

Upward Breakouts

  • Single busts: 50% of busted symmetrical triangles bust only once.
  • Double busts: 32% of them bust twice.
  • Three or more busts: 19% of them bust at least three times.

For upward breakouts, half of them will bust just once, meaning that half (50%) will fail to drop more than 10% below the bottom of the triangle.

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Downward Breakouts

  • Single busts: 71% of busted symmetrical triangles bust only once.
  • Double busts: 16% of them bust twice.
  • Three or more busts: 14% of them bust at least three times.

If you trade busted symmetrical triangles with downward breakouts, there is a 71% probability that it will bust just once. Thus, 29% fail to show price rising by more than 10% above the top of the symmetrical triangle.

What is the average move for single busted symmetrical triangles? As measured from the bottom (the lowest valley) or the top (the highest peak) of the chart pattern to the ultimate low or high, respectively, the move averaged:

Upward Breakouts

  • The average drop: 19% (that is, price breaks out upward and busts the triangle, moving lower)
  • Median (mid range) drop: 18%
  • By comparison, all triangles* (both busted and non-busted) with downward breakouts drop: 9% (average), 6% (median)

Downward Breakouts

  • The average rise: 41%
  • Median (mid range) rise: 30%
  • By comparison, all triangles* (both busted and non-busted) with upward breakouts rise 29% (average), 22% (median)

The downward breakout comparison is not a fair comparison between all triangles and busted ones. Busted triangles measure from the highest peak in the triangle to the ultimate high. "All triangles" measure from the low price on the day of breakout, where price pierces the down-sloping trendline, to the ultimate high. In other words, the busted numbers are penalized. However, the busted numbers only reflect single busted patterns, not multiple busted ones. Again, the comparison is unfair.

* I decided to include busted triangles in the mix because a trader cannot know ahead of the breakout that the triangle will bust. To remove all of those that did bust is to remove most losing trades, which is unfair. Excluding busted triangles, upward breakouts gain 40% and downward breakouts lose 16%.
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What is the move for perfect trades after all busted symmetrical triangles?

  • Upward breakout, the average drop: 10%
  • Upward breakout, median (mid range) drop: 8%
  • Downward breakout, the average rise: 28%
  • Downward breakout, median rise: 21%

What is the failure rate of all busted symmetrical triangles in bull markets? The answer appears in the below table.

Failure Rate for Busted Symmetrical Triangles, Upward Breakouts
Failure rate:  5%  10%  15%  20%  25%  30%  35%  50%  75%  >75% 
Number of symmetrical triangles:1247242312214111650
Percentage:37%21%12%9%7%4%3%5%1%0%
Cumulative:37%58%71%80%86%91%94%99%100%100%

For example, there were 124 symmetrical triangles with upward breakouts that failed to show price dropping at least 5% below the bottom of the symmetrical triangle. Those 124 represent 37% of all bull market, busted symmetrical triangles. On a cumulative basis (a running total), the 124 also represent 37% of all busted symmetrical triangles with upward breakouts.

The median drop of all busted symmetrical triangles is 8%. You can see that by interpolating between the 5% and 10% columns. Thus, half of all busted symmetrical triangles will see price drop 8% in a bull market, providing they are traded perfectly.

Failure Rate for Busted Symmetrical Triangles, Downward Breakouts
Failure rate:  5%  10%  15%  20%  25%  30%  35%  50%  75%  >75% 
Number of symmetrical triangles:61473822282812314437
Percentage:18%14%11%6%8%8%3%9%13%11%
Cumulative:18%31%42%48%56%64%68%77%89%100%

Read the table just as you did the prior one. Let's begin with the 10% column. Forty-seven triangles saw gains from over 5% to less than or equal to 10%. They represented 14% of busted triangles. On a cumulative basis, 31% of triangles saw price climb up to 10% after busting a downward breakout (as measured from the top of the pattern to the ultimate high).

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Trading Busted Symmetrical Triangles

Picture of Headwaters (HW) on the daily scale.

How could you trade a busted symmetrical triangle? The figure on the right gives an example.

A symmetrical triangle appears in November 2010 in Headwaters (HW). Price breaks out downward from this pattern at A by closing outside of the bottom trendline (which is difficult to see in the figure) but quickly reverses.

Price busts the triangle for the first time when price does not drop more than 10% below the breakout price and it closes above the top of the triangle. That happens at B.

In this example, price moves up to C before climbing off the chart.

If you bought the stock the day after it closed above the top of the triangle (day after B), you would have received a fill at 4.25. Selling at the ultimate high in April 2011, at 6.41, would have made you 51%, not including commissions. That would represent a perfect trade.

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Additional Trading Tips for Busted Symmetrical Triangles

All of these tips apply to bull markets only!

For a definition of the trend start, visit the glossary.

For downward breakouts, when the time between the trend start and the start of the symmetrical triangle is less than or equal to the median 77 days, the stock rises an average of 27% (159 samples). When the time is more than the median, the rise averages 30% (159 samples). Thus, for busted triangles with downward breakouts (price rises after busting), look for a trend start more than 77 days before the start of the triangle.

For upward breakouts, the numbers flip: 9% average gain (158 samples) versus 13% (161 samples) for times of more than 83 days (the median for upward breakouts) versus shorter periods, respectively. The best performance comes when the trend start is less than 83 days before the start of the triangle.

When the trend start price is above the top of the busted symmetrical triangle by less than or equal to the median 12% and the triangle breaks out downward, the busted pattern sees the stock rise by 19% (68 samples). If the trend start is above the busted triangle by more than 12%, the rise averages 35% (68 samples). These measures exclude trend starts below the top of the triangle.

The performance difference for upward breakouts is 13% (less than the median) to 10% (more than the median) for a median measure of 9% above the top of the triangle. For the best performance, look for a trend start less than 9% above the top of the triangle.

Comparing the trend start to above or below the top of the triangle (a different measure than the previous), we find the following.

If the high price at the trend start is below the top of the triangle and price breaks out downward, then busted patterns see price climb an average of 31% (182 samples). When the trend start is above the triangle, the rise averages just 24% (136 samples). Look for the trend start to be below the start of the triangle after a downward breakout.

For upward breakouts, look for the trend start to be above the top of the triangle. The average drop after a busted symmetrical triangle is 12% (120 samples) versus 10% (199 samples) for a trend start above and below the top of the triangle, respectively.

Moving Averages Tests for Busted Symmetrical Triangles

I did test the busted chart patterns using 50- and 200-day simple moving averages. For downward breakouts, when price was below the 50-SMA, the busted stock gained an average of 32% (just 28 samples). When price was above the 50-SMA, the stock gained 28% (320 samples). I don't consider this significant since the sample counts are few.

For upward breakouts, price below the 50-SMA showed losses averaging 11% (282 samples) versus 8% loss from 55 samples (price above the 50-SMA). That's not a bad result but my guess is the difference between the two percentages will narrow with additional samples.

The 200-day SMA did not show results significant enough to be worth reporting.

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Entry Setup for Busted Symmetrical Triangles

Picture of my dog with her ears up.

As an entry setup, here are the rules for trading busted symmetrical triangles.

For upward breakouts...

  1. Price must confirm a symmetrical triangle by closing above the top trendline (an upward breakout).
  2. Price rises less than 10% before reversing and closing below the bottom of the symmetrical triangle. This busts the pattern.
  3. Measure the time between the trend start and the start of the triangle. If it is longer than 83 days, skip the trade.
  4. If the high price at the trend start is below the top of the triangle, skip the trade.
  5. Place a conditional order to short the stock if price closes a penny below the bottom of the symmetrical triangle.
  6. Place a stop a penny above the top of the triangle. If the stop location is too far away, adjust the stop accordingly, but recognize that you stand a greater chance of failure since price can retrace back into the pattern.
  7. Cover the short when the trend changes.

For downward breakouts...

  1. Price must confirm a symmetrical triangle by closing below the lowest valley in the pattern (that is, a downward breakout).
  2. Price drops less than 10% before reversing and closing above the top of the symmetrical triangle. This busts the pattern. You could use a close above the top trendline, but it's more risky.
  3. Locate the trend start leading to the symmetrical triangle. If the trend start is above the top of the symmetrical triangle skip the trade.
  4. Place a conditional order to buy the stock before price closes a penny above the top of the symmetrical triangle (as mentioned, you can use a penny above the top trendline, but that entails more risk of failure).
  5. Once in the trade, place a stop a penny below the bottom of the triangle. If the stop location is too far away, adjust the stop accordingly, but recognize that you stand a greater chance of failure with closer stops.
  6. Sell when the trend changes.

-- Thomas Bulkowski

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See Also

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. How many right-to-lifers does it take to change a light bulb? Two. One to screw it in and one to say that light started when the screwing began.