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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 Ascending and Inverted Scallops

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 09/20/2017
22,413 41.79 0.2%
9,654 147.29 1.5%
732 -5.08 -0.7%
6,456 -5.28 -0.1%
2,508 1.59 0.1%
YTD
13.4%
6.8%
10.9%
19.9%
12.0%
Tom's Targets    Overview: 09/14/2017
22,450 or 21,500 by 10/01/2017
9,750 or 9,200 by 10/01/2017
775 or 730 by 10/01/2017
6,650 or 6,200 by 10/01/2017
2,600 or 2,425 by 10/01/2017

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.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 639 to 653. That chapter gives a complete review of the chart pattern, compared to what is described below.

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An inverted and ascending scallop

Ascending and Inverted Scallop Overview

The inverted and ascending scallop looks like the right half of an umbrella. The beauty of this chart pattern is that it performs so well in both bull and bear markets, sporting a low break even failure rate and a large average rise.

Discovered by Thomas Bulkowski in the early 2000's but it may have been uncovered by others earlier.

Important Bull Market Results for Ascending and Inverted Scallops

Overall performance rank (1 is best): 3 out of 23
Break even failure rate: 4%
Average rise: 43%
Throwback rate: 61%
Percentage meeting price target: 61%

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

Ascending and Inverted Scallop Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the pattern or at the bullish turning point of a downward price trend.
ShapeInverted and backward J shape. It looks like the right half of an umbrella. The rise should be a straight, or nearly straight run up, then rounded at the top followed by a small decline.
Smooth topThe peaks should form a rounded turn but larger patterns may not be as smooth.
RetraceThe end of the pattern on the right usually retraces 55% of the prior up move. Avoid 100% retraces.
VolumeTrends downward 71% of the time
ConfirmationThe pattern confirms when price closes above the highest high in the pattern.
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Ascending and Inverted Scallop Trading Tips

Consult the associated figures on the right.

Trading TacticExplanation
Measure ruleCompute the height from the highest peak ( B) to the lowest valley in the pattern (A) and then multiply it by the above “percentage meeting price target.” Add the difference to the highest peak (B) to get a price target C. The link to the left provides more information on the measure rule.
StopIf price drops below the right scallop edge, sell. See the measure rule figure to the right for the proper stop location.
BuyBuy when price closes above the highest peak in the pattern (B).
SwingersSwing traders will want to buy when price bottoms on the right and sell when it climbs to the top of the pattern.
AvoidIf price drops below the start of the pattern (A), then avoid this one.
Avoid valleyIf price forms a distinct right valley and then price drops below the valley, sell. The figure to the right ("New Stop Location") shows the proper location for a stop in this situation.
Breakout volumeHeavy breakout volume suggests better performance. The link shown to the left discusses statistics on breakout volume. The following link gives additional information on other chart patterns that also do well after heavy breakout volume.
Inverted and ascending scallop measure rule
The Measure Rule
Inverted and ascending scallop avoidance
New Stop Location
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Inverted and ascending scallop chart pattern example

Ascending and Inverted Scallop Example

The figure on the right shows an example of an inverted and ascending scallop chart pattern. Price bottoms at point A and then rises to B where it rounds downward to C.

To calculate a price target, subtract the price of valley A from peak B. That finds the height. Multiply the height by 61% (the percentage meeting price target from Important Bull Market Results table near the top of this page) and add the result to the price at B. Place a stop loss order a few pennies below C, and raise the stop as price climbs.

-- Thomas Bulkowski

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Other Ascending and Inverted Scallop Examples

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. Organized people are just too lazy to look for things.