As of 04/19/2021
  Indus: 34,078 -123.04 -0.4%  
  Trans: 14,799 -120.71 -0.8%  
  Utils: 921 -2.88 -0.3%  
  Nasdaq: 13,915 -137.57 -1.0%  
  S&P 500: 4,163 -22.21 -0.5%  
YTD
 +11.3%  
 +18.3%  
 +6.5%  
 +8.0%  
 +10.8%  
  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 04/19/2021
  Indus: 34,078 -123.04 -0.4%  
  Trans: 14,799 -120.71 -0.8%  
  Utils: 921 -2.88 -0.3%  
  Nasdaq: 13,915 -137.57 -1.0%  
  S&P 500: 4,163 -22.21 -0.5%  
YTD
 +11.3%  
 +18.3%  
 +6.5%  
 +8.0%  
 +10.8%  
  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 Symmetrical Triangles

 

Updated with new statistics on 12/28/2020.

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

$ $ $

Busted Symmetrical Triangles: Summary

Price can breakout of a symmetrical triangle in any direction. When price moves no more 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 with downward breakouts bust 48% of the time in bull markets. I'll discuss additional statistics in Performance.

Busted Symmetrical Triangles: Single Busts

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 no more 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 no more than 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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Busted Symmetrical Triangles: Double Busts

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 (more than 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 no more 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 more than 10% in the new direction. That is the move from the green line upward toward D.

If price fails to move no more than 10% in the new direction, then it is a triple busted symmetrical triangle.

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Busted Symmetrical Triangles: 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 more than 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 more than 10% before reversing and closing on the opposite side of the symmetrical triangle, additional up and down busted cycles may continue.

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Busted Symmetrical Triangles: Performance

Here's a few statistics from the book. This is for symmetrical triangles with downward breakouts (so they bust upward).

Busted Symmetrical Triangles: Trading

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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-- Thomas Bulkowski

See Also

 

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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

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