Subscribe to RSS feeds Bulkowski Blog via RSS

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

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Time vs Pattern Width

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 02/24/2017
20,822 11.44 0.1%
9,422 86.07 0.9%
699 10.33 1.5%
5,845 9.80 0.2%
2,367 3.53 0.1%
YTD
5.4%
4.2%
6.0%
8.6%
5.7%
Tom's Targets    Overview: 02/14/2017
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
Mutt Losers: None YTD
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.

Time vs Pattern Width: Summary, Methodology, and Results

This page examines the relationship between time to the ultimate high or low and pattern width.

$ $ $

My book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., shown on the left, has statistics about pattern size for each of the chart patterns in the book.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

 

$ $ $

I used 40 different chart patterns (such as a falling wedge, double bottom, and so on) and over a thousand stocks, starting from July 1991 to June 2008. I logged the pattern width and the time it took to reach the ultimate high or low. The ultimate high or low is the highest high or lowest low, respectively, before price changes trend by at least 20%. As an example for the ultimate high, that means a decline of at least 20%. I uncovered 23,342 chart patterns that qualified. I used them all and wish I hadn't. The spreadsheet was about 25 megabytes in size and when you changed one variable, it took between 20 and 40 minutes to recalculate it.

Time vs Pattern Width: Downward Breakouts

A frequency distribution of the ratio between the time to the ultimate low vs pattern width

The chart shows a frequency distribution of the ratio of the time from the end of the pattern to the ultimate low divided by the pattern width. Values above 1 mean it takes longer to reach the ultimate low than the pattern is wide. I show 1.00 circled in red. The bar is off the chart because 55% of the patterns take less than the pattern's width to reach the ultimate low.

The two red bars include the Fibonacci values of 38% and 62% (the first column includes all ratios up to 1. The next column includes the ratios from over 1 up to and including 1.05. Thus the 38% and 62% values will appear in the 1.40 and 1.65 columns). The right-most column is a catch-all because it includes all ratios over 2.40.

I do not see anything significant here at all. I had hoped to see peaks at the Fibonacci extension levels, but they are not there.

Top of page   More

Time vs Pattern Width: Upward Breakouts

A frequency distribution of the ratio between the time to the ultimate high vs pattern width

What about upward breakouts? A similar chart appears and I show that directly above. I used the same method as before only I compared the time to the ultimate high versus the pattern width. The red bars include the Fibonacci values of 38% and 62%, just as before. This time, however, fewer patterns flame out before exceeding the pattern width. Just 39% fall into the first category (every ratio up to 1.00). That means 61% of the patterns take longer to reach the ultimate high than the pattern's width.

-- Thomas Bulkowski

Top of page   More  

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. Hi ocifer. I'm not under the affluence of incohol.