As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Bulkowski's Study of Studies

 

For more information on individual patterns described below, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right.

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

$ $ $

This is a study of studies for chart patterns in a bull market only. For example, I conducted 53 separate studies of chart patterns using thousands of samples, perfectly traded, and without any deductions for trading costs. Do reversals work better than continuations? If the first study (broadening bottoms) performed better as reversals, then the score is 1. If the next study (Adam & Adam double bottoms) showed the chart pattern performing better as reversals, the score rises to 2, and so on. The final percentage shows the ratio between the two scores. Not all chart patterns were studied.

 

Do reversals work better than continuations?
Where do chart patterns perform best, with the breakout near the yearly high, middle, or low?
Do throwbacks hurt performance?
Do pullbacks hurt performance?
Do breakout day gaps help performance?
Do tall patterns perform best?
Do narrow patterns perform best?
What is the best performing pattern height and width combination?
Does a rising volume trend within the chart pattern result in best performance?
What is the best performing volume shape?
Does heavy breakout volume mean better performance? Updated 8/12/19.
See Also

Do reversals work better than continuations? The results are mixed with 58% of reversals performing better after an upward breakout. That means price trends down and then reverses. Downward breakouts from chart patterns perform better if price is already trending down. A more recent study shows reversals outperforming continuations in both bull and bear markets, but does not separate results by breakout direction. For more information, including an Excel spreadsheet of the numbers, see the study Top 10 Reversals & Continuations.

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Where do chart patterns perform best, with the breakout near the yearly high, middle, or low? Ignoring low sample counts which occurs when splitting the yearly range into thirds, for both breakout directions, the yearly low is the best place for a breakout. For downward breakouts, this bolsters the observation that you should short stocks making new lows, not those making new highs. Shorting a stock making a new high leads to the worst performance.

See Buy low or buy high study for more information.

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Do throwbacks hurt performance? Yes: 97% of chart pattern types (think of this as a straw poll of double bottoms (1 vote for all double bottoms), head-and-shoulder bottoms (1 vote for all H&Ss), etc) with upward breakouts perform better post breakout without a throwback. Avoid overhead resistance when trading. See also Throwbacks.

Do pullbacks hurt performance? Yes. Again 97% of chart pattern types (think of this as a straw poll of double tops (1 vote for all double tops), head-and-shoulder tops (1 vote for all H&Ss), etc)with downward breakouts perform better if a pullback does NOT occur. Look for underlying support before taking a position in a stock. See also Pullbacks.

Do breakout day gaps help performance? In nearly 2 out of 3 trades, gaps that occur on the day of breakout help performance regardless of the breakout direction.

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Do tall patterns perform best? Yes. Both breakout directions make a strong showing. Always trade tall patterns and ignore short ones. What is meant by short and tall? Take the height of the chart pattern and divide it by the breakout price then look up the chart pattern in the book, Encyclopedia of Chart Patterns, Second Edition. Size statistics appear in Table x.6. Compare your result with the “median height as a percentage of the breakout price.” Patterns with numbers higher than the median are tall.

Do narrow patterns perform best? The results are mixed with wide patterns performing better after an upward breakout (but not by much) and twice as many narrow patterns as wide ones do well for downward breakouts. Thus, if you own a stock showing a downward breakout from a narrow pattern then consider selling. What is meant by wide and narrow? Compute the length of your chart pattern from the start of the pattern to the end (usually the time between the first and last peaks or valleys, not the breakout). Double tops, for example, have a width measured from peak to peak (the highest high in each peak). Then find the size table in the book, Encyclopedia of Chart Patterns, Second Edition. Size statistics appear in Table x.6. Compare your result with the “median length.” Patterns with numbers lower than the median are narrow.

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What is the best performing pattern height and width combination? As might be expected, chart patterns both tall and narrow outperform the other combinations. What is meant by tall and narrow? See Do tall patterns perform best? and Do narrow patterns perform best?

Does a rising volume trend within the chart pattern result in the best performance? The results are close and mixed. Upward breakouts perform slightly better when volume trends upward from the start of the chart pattern to the day before the breakout. Downward breakouts do better with a falling volume trend. See also Volume Trend.

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What is the best performing volume shape? Chart formations with U-shaped volume perform best, but the results are close. What is U or dome shaped volume? On the right of page 989 in my book Encyclopedia of Chart Patterns, Second Edition shows examples of the various volume shapes. See also Volume Shapes.

Does heavy breakout day volume mean better performance?

For both breakout directions, heavy breakout volume can mean better performance after the breakout, but my guess is you won't notice. Heavy breakout day volume means above the 30-day volume average (one month of calendar days, not trading days) up to but not including the breakout day. See also Breakout Day Volume.

For upward breakouts, I counted 37 different chart patterns (37 contests), and upward breakouts won 65% of the time. Downward breakouts were closer, winning 47% of the time. The remainder were ties.

If you say that a tie is any contest where the two values differ by two percentage points or less, then you get the following.

Heavy breakout volume for upward breakouts still win 59% of the time, compared to 19% of the time for below average breakout volume. But look what happens for downward breakouts. Just 12% win after heavy breakout volume with the vast majority, 88%, showing 2% or less performance difference between heavy and light breakout volume.

See also:

-- Thomas Bulkowski

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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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