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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 Partial Rises

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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.

My book, Getting Started in Chart Patterns, Second EditionGetting Started in Chart Patterns, Second Edition book., discusses partial rises and declines starting on page 207 in the section conveniently titled, "Partial Rises and Declines." Film at 11:00. I show a picture of the book on the left.

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Partial rises are looping chart patterns that appear at the end of broadening patterns and rectangles. They predict an immediate downward breakout.

New research (as of November 2013) says that when a partial rise does not occur, post-breakout performance improves. However, the performance results are similar.

 

 

Partial rise chart pattern

Partial Rise Chart Pattern

Partial Rise Identification Guidelines

CharacteristicDiscussion
EstablishedThe rectangle or broadening chart pattern should be an established one, meaning that it should obey all of the identification guidelines for that pattern. Don’t look for a partial rise until you have a completed rectangle or broadening chart pattern.
Bottom trendlinePrice should touch the bottom trendline and move up but not touch or come that close to the top trendline before heading back down. When price touches the lower trendline, it usually stages an immediate downward breakout. Sometimes, it may linger at the lower trendline before plunging through. If price rebounds, close out your position.
BreakoutDownward. This usually occurs immediately after the partial rise touches the lower trendline.
PausePrice often pauses partway across a chart pattern so it may look like a partial rise is forming. Wait for price to head back down before shorting the stock.
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Partial Rise Trading Tips

Trading TacticExplanation
Price loopIf price bounces off the lower trendline and heads back up, then rounds over before coming close to the top trendline, then it may be a partial rise. Short once it’s clear that price is heading back toward the lower trendline.
FibonacciA trend reversal at the 50% or 62% Fibonacci retrace of the prior down move may signal a partial rise.
PausePrice may pause at the lower trendline, perhaps slide along it before breaking out downward.
CoverCover your short if price bounces off the lower trendline and heads back up.
BreakoutExpect a downward breakout after a partial rise.
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Partial Rise Patterns

The following table shows how often a partial rise correctly predicts a downward breakout in bull markets.

Chart PatternsSuccess
Rate
Broadening bottoms67%
Broadening formations, right-angled and ascending74%
Broadening formations, right-angled and descending54%
Broadening tops61%
Broadening wedges, ascending74%
Broadening wedges, descending14%
Rectangle bottoms74%
Rectangle tops57%

Partial Rise Example

Partial rise in a broadening bottom chart pattern

The above figure shows an example of a broadening bottom chart pattern. This broadening bottom is not my favorite example because price does not cross the pattern often enough. In other words, there is too much white space in the middle to end of the pattern. Nevertheless, price touches each trendline boundary often enough so the broadening pattern is established. Price in the partial rise attempts to reach the top trendline but fails. This partial rise is a gentle turn that leads to an immediate downward breakout.

Partial Rise: New Performance Research

This is based on new research using stock information from 3/1989 to 11/11/13. Not all stocks covered the entire period. I used broadening formations (all six types) and rectangles (tops and bottoms) in the research. Those patterns can show partial rises.

I compared the performance of 5,959 chart patterns with and without partial rises. This answers the question, "Does performance improve if a partial rise is absent?

The answer is yes, but not that you'd notice.

The 583 chart patterns with partial rises showed post breakout declines that averaged 13%. That compares to losses from 1,273 chart patterns that did not show a partial rise. Their losses averaged 14%. Since the numbers are so close, it's probably a statistical tie, even though the scale tilts to better performance if a partial rise does not occur.

-- Thomas Bulkowski

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Other Partial Rise 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've told you a million times, don't exaggerate!