Bulkowski’s Height and Width

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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.

Bull Markets