As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019
As of 08/20/2019
  Indus: 25,962 -173.35 -0.7%  
  Trans: 10,006 -75.35 -0.7%  
  Utils: 834 -1.95 -0.2%  
  Nasdaq: 7,949 -54.25 -0.7%  
  S&P 500: 2,901 -23.14 -0.8%  
YTD
 +11.3%  
 +9.1%  
 +17.0%  
 +19.8%  
 +15.7%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019

Bulkowski's Pipe Bottoms

 

Statistics updated on 11/30/2018.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 536 to 549.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

Pipe bottoms are excellent performers in a bull market. They have a modest break even failure rate and high average rise. The bad news is that they appear on the weekly scale, so the delay buying in can be costly. Nevertheless, you should wait for confirmation before trading this and other chart patterns. Discovered by Thomas Bulkowski in 1998.

Pipe bottom chart pattern
Pipe Bottom Pattern

 

Pipe Bottom: Important Bull Market Results

Overall performance rank (1 is best): 11 out of 56
Break even failure rate: 8%
Average rise: 54%
Throwback rate: 26%
Percentage meeting price target: 77%

The above numbers are based on more than 8,800 perfect trades. See the glossary for definitions.

Pipe Bottom: Identification Guidelines

CharacteristicDiscussion
Weekly chartPipes appear on the daily scale but the ones on the weekly charts perform better. Use the weekly chart.
Price trendUsually downward leading to the pattern.
ShapeTwin and adjacent downward spikes. On a bar chart, the two price bars look like spikes. On a candlestick chart, the candles can be any shape (from doji to Marubozu). In other words, don't let the term spike mislead you.
OverlapThe 2 weeks often have a large price overlap but need not bottom at the same price. The median bottom price variation is 19 cents.
VolumeMost pipes show above average volume on one or both spikes.
ObviousThe pipe should stand-alone and be obvious on the chart. The spike should clear the surrounding price action.
DowntrendsThe best performing pipes appear at the end of downtrends.
ConfirmationThe pattern confirms (becomes a valid pattern) when price closes above the highest high in the pattern.

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Pipe Bottom Trading Tips

Trading TacticExplanation Pipe bottom measure rule
The Measure Rule

Pipe bottom spike

Spike

Measure ruleCompute the height from the taller of the two spikes to the lower of the two (the AB distance in the Measure Rule figure to the right) then multiply by the above 'percentage meeting price target.' Add the difference to the higher of the two (A) to get a price target, C.
BuyBuy when price closes above the higher of the two spikes. I show that as A in the Measure Rule figure to the right.
TrendsPipes with a short-term (up to 3 months) downtrend leading to the pipe perform best.
Uneven lowsPipes with uneven lows tend to perform better than do those with spikes that bottom at the same price. The Spike figure shows an example of spikes with uneven lows (spike B is lower than spike A).
Yearly lowPipes within a third of the yearly low perform best.
VolumeHeavy left spike volume when compared to the right suggests better performance.
StopIf price closes below the lower of the two spikes, then close out your position.

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Pipe Bottom Example

Pipe bottom chart pattern example

The above figure shows an example of a pipe bottom chart pattern. This pipe bottom appears as part of a retrace in an uptrend, signaling higher prices ahead. The retrace begins at A and bottoms at the pipe then price begins its recovery. Shown on the weekly scale.

-- Thomas Bulkowski

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Other Pipe Bottom Examples

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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Some pattern names are registered trademarks of their respective owners.

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