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 Bumper.
Kindle
Paperback
Nook
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 Ascending Scallops

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 11/22/2017
23,526 -64.65 -0.3%
9,627 11.94 0.1%
758 -0.24 0.0%
6,867 4.88 0.1%
2,597 -1.95 -0.1%
YTD
19.0%
6.4%
14.9%
27.6%
16.0%
Tom's Targets    Overview: 11/14/2017
23,700 or 22,800 by 12/01/2017
9,300 or 9,800 by 12/01/2017
800 or 750 by 12/01/2017
7,000 or 6,500 by 12/01/2017
2,625 or 2,540 by 12/01/2017

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 624 to 638. That chapter gives a complete review of the chart pattern, compared to what is described below.

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

$ $ $

Ascending Scallops Overview

Ascending scallops are arguably the most common chart pattern, but they are poor performers, especially in a bear market. Downward breakouts from the ascending scallop chart pattern is especially treacherous as price tends to reverse quickly. Trade this pattern carefully and be sure to have a stop in place.

Important Bull Market Results for Ascending Scallops

Overall performance rank for up/down breakouts (1 is best): 16 out of 23; 20 out of 21
Break even failure rate for up/down breakouts: 10%; 27%
Average rise/decline: 31%; 14%
Throwback/pullback rate: 58%; 56%
Percentage meeting price target for up/down breakouts: 58%; 25%

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

Shown is an ascending scallop chart pattern
Ascending Scallop

Ascending Scallop Identification Guidelines

CharacteristicDiscussion
Price trendUpward leading to the chart pattern.
ShapeThe chart pattern looks like the letter J. Find two peaks with a rounded valley in between and a higher right peak.
Volume shapeAscending scallops often show U-shaped volume, which the link to the left shows.
NarrowingScallops tend to be wider near the start of a price trend than near the end.
Breakout, confirmationA close above the highest high signals an upward breakout. Downward breakouts are a close below the pattern's low. A breakout confirms the scallop as a valid chart pattern.
Top of page   More

Ascending Scallop Trading Tips

Consult the associated figures on the right.

Trading TacticExplanation
Measure ruleCompute the height from the highest peak (A) to the lowest valley in the pattern (B) and then multiply it by the above “percentage meeting price target.” Add the difference to the highest peak (A) to get a price target for upward breakouts (C) or subtract it from the lowest valley (B) for downward breakouts to get a target price. The link to the left provides more information on the measure rule.
HandleWhen price peaks on the right of the pattern, it often retraces, forming a handle or another scallop. When price bottoms, buy. The figure on the lower right shows an example.
StopPlace a stop below the lowest valley (B in the figure to the upper right) if it's not too far away. The associate link provides more information about stop placement.
Tall patternsTall patterns perform better than short ones. The associated link on the left gives more information.
Volume trendA rising volume trend suggests better performance. The link gives an example.
Volume shapeScallops with upward breakouts do better when volume is U-shaped. The link to the left provides performance information. Downward breakouts perform best when volume is dome shaped. This link provides an example.
Breakout volumeAscending scallops with heavy breakout volume outperform. The link to the left provides more information while this link provides performance information.
Yearly lowBreakouts from scallops within a third of the yearly low do best. See the link to the left for more information.
ThrowbackThrowbacks hurt post breakout performance. The link on the left defines a throwback and this link gives performance information.
SeriesAscending scallops in a rising price trend tend to get shorter and narrower as the trend end approaches.
Ascending scallop measure rule
The Measure Rule

 

Ascending scallop with handle buy point
Scallop Handle
Top of page   More

Ascending scallop chart pattern example

Ascending Scallop Example

The figure on the right shows an example of an 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 58% (upward breakouts, 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 if the ascending scallop forms a handle. If no handle appears, a stop below A may be too far away, but consider it. Raise the stop as price rises.

For downward breakouts, subtract the B-A height from A to get a lower target. Ignore targets less than zero.

-- Thomas Bulkowski

 

Top of page   More  

Other Ascending 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. I'm paranoid! Stop following me!