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Written by and copyright © 2005-2008 by Thomas N. Bulkowski. All rights reserved.
In
numerous studies I have conducted, one factor stands above all others when trying
to gauge the best performance of
a chart pattern. Height. Tall chart patterns perform better than short ones. What
is meant by tall and what is meant by
short? Compute the chart pattern’s height from the highest peak to the
lowest valley. Divide the result by the breakout
price and then compare it to the median height shown in the following table. If
your number is greater than the median then
you have a tall pattern. If your number is less than the median then your chart
pattern is short.
A
similar situation applies to width. Unfortunately, width is a poor indicator of
performance because some wide chart patterns
perform better and some don’t. Measure the length of the chart pattern from
its start to its end and compare it to the
median width listed in the following table. Wide chart patterns have widths
greater than the median. Narrow chart patterns
have widths less than the median. Where does a chart pattern start and end? Use
the first peak or valley and the last peak of valley in the chart pattern as the
start and end points. A head-and-shoulders top, for example, begins with the
highest peak in the left shoulder and ends with the highest peak in the right
shoulder.
The
“Works Best” column in the following table shows whether tall or short
works best for height and narrow or wide works best for width.
For more information consult the book Encyclopedia of Chart Patterns, Second Edition.
Bull Markets
|
Bull
Market Chart Pattern |
Median Height
(%) |
Works
Best |
Median Width (days) |
Works
Best |
|
Broadening
Bottoms, down breakout |
17.50 |
Tall |
49 |
Tie |
|
Broadening
Bottoms, up breakout |
15.13 |
Tall |
45 |
Narrow |
|
Broadening
Formations, Right-Angled and Ascending, down breakout |
14.70 |
Tall |
64 |
Wide |
|
Broadening
Formations, Right-Angled and Ascending, up breakout |
13.24 |
Tall |
59 |
Wide |
|
Broadening
Formations, Right-Angled and Descending, down breakout |
14.20 |
Tall |
55 |
Wide |
|
Broadening
Formations, Right-Angled and Descending, up breakout |
13.13 |
Tall |
63 |
Tie |
|
Broadening
Tops, down breakout |
15.95 |
Tall |
49 |
Tie |
|
Broadening
Tops, up breakout |
14.66 |
Tall |
52 |
Wide |
|
Broadening
Wedges, Ascending, down breakout |
23.31 |
Tall |
83 |
Narrow |
|
Broadening
Wedges, Ascending, up breakout |
18.60 |
Tall |
66 |
Wide |
|
Broadening
Wedges, Descending, down breakout |
22.40 |
Tall |
55 |
Narrow |
|
Broadening
Wedges, Descending, up breakout |
21.77 |
Tall |
52 |
Narrow |
|
Bump-and-Run
Reversal Bottoms, up breakout |
35.87 |
Tall |
120 |
Wide |
|
Bump-and-run
Reversal Tops, down breakout |
43.48 |
Tall |
161 |
Narrow |
|
Cup-with-Handle,
up breakout |
27.41 |
Tall |
155 |
Narrow |
|
Cup-with-Handle,
Inverted, down breakout |
31.93 |
Tall |
107 |
Narrow |
|
Diamond
Bottoms, down breakout |
13.42 |
Tall |
27 |
Narrow |
|
Diamond
Bottoms, up breakout |
13.19 |
Tall |
27 |
Wide |
|
Diamond
Tops, down breakout |
10.70 |
Tall |
36 |
Narrow |
|
Diamond
Tops, up breakout |
12.43 |
Tie |
37 |
Narrow |
|
Double
Bottoms, Adam & Adam, up breakout |
17.54 |
Tall |
37 |
Tie |
|
Double
Bottoms, Adam & Eve, up breakout |
17.28 |
Tall |
50 |
Narrow |
|
Double
Bottoms, Eve & Adam, up breakout |
18.03 |
Short |
50 |
Narrow |
|
Double
Bottoms, Eve & Eve, up breakout |
16.40 |
Short |
50 |
Narrow |
|
Double
Tops, Adam & Adam, down breakout |
17.12 |
Tall |
35 |
Narrow |
|
Double
Tops, Adam & Eve, down breakout |
17.02 |
Tall |
39 |
Narrow |
|
Double
Tops, Eve & Adam, down breakout |
15.82 |
Tall |
40 |
Narrow |
|
Double
Tops, Eve & Eve, down breakout |
17.13 |
Tall |
43 |
Narrow |
|
Flags,
down breakout |
5.38 |
Tall |
9 |
Narrow |
|
Flags,
up breakout |
6.68 |
Tall |
8 |
Wide |
|
Flags,
High and Tight, up breakout |
20.91 |
Short |
65 |
Narrow |
|
Gaps |
N/A |
N/A |
N/A |
N/A |
|
Head-and-Shoulders
Bottoms, up breakout |
18.81 |
Tall |
55 |
Narrow |
|
Head-and-Shoulders
Bottoms, Complex, up breakout |
17.70 |
Tie |
90 |
Wide |
|
Head-and-Shoulders
Tops, down breakout |
17.27 |
Tall |
49 |
Narrow |
| |