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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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Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Study of Studies

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 02/17/2017
20,624 4.28 0.0%
9,495 20.41 0.2%
672 1.27 0.2%
5,839 23.68 0.4%
2,351 3.94 0.2%
YTD
4.4%
5.0%
1.9%
8.5%
5.0%
Tom's Targets    Overview: 02/14/2017
20,750 or 19,800 by 03/01/2017
8,800 or 9,700 by 03/01/2017
700 or 640 by 03/01/2017
5,950 or 5,650 by 03/01/2017
2,400 or 2,260 by 03/01/2017
Indus strength: None YTD
Mutt Losers: None YTD
Mutt Winners: None YTD

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.

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 this link and then buy the book (or anything) 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?

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.

  • Upward breakouts
  • Reversals: 58%
    Continuations: 42%
  • Downward breakouts
  • Reversals: 44%
    Continuations: 56%
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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.
  • Upward breakouts
  • High: 27%
    Middle: 32%
    Low: 41%
  • Downward breakouts
  • High: 20%
    Middle: 25%
    Low: 55%
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Do throwbacks hurt performance? Yes: 97% of chart patterns with upward breakouts perform better post breakout without a throwback. Avoid overhead resistance when trading. See also Throwbacks.

    Yes: 97%
    No: 3%

Do pullbacks hurt performance? Yes. Again 97% of chart patterns 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.

    Yes: 97%
    No: 3%

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.

  • Upward breakouts
  • Gap: 63%
    No gap: 37%
  • Downward breakouts
  • Gap: 65%
    No gap: 35%
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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.

  • Upward breakouts
  • Tall: 86%
    Short: 14%
  • Downward breakouts
  • Tall: 97%
    Short: 3%

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.

  • Upward breakouts
  • Narrow: 44%
    Wide: 56%
  • Downward breakouts
  • Narrow: 69%
    Wide: 31%
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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?

  • Upward breakouts
  • Short and narrow performs best: 11%
    Short and wide performs best: 6%
    Tall and wide performs best: 26%
    Tall and narrow performs best: 57%
  • Downward breakouts
  • Short and narrow performs best: 6%
    Short and wide performs best: 3%
    Tall and wide performs best: 33%
    Tall and narrow performs best: 58%

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.

  • Upward breakouts
  • Rising: 53%
    Falling: 47%
  • Downward breakouts
  • Rising: 42%
    Falling: 58%
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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.

  • Upward breakouts
  • U-shaped: 42%
    Dome: 28%
    Random: 31%
  • Downward breakouts
  • U-shaped: 42%
    Dome: 27%
    Random: 30%

Does heavy breakout day volume mean better performance? For both breakout directions, heavy breakout volume is very important to chart pattern performance after the breakout. 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 .

  • Upward breakouts
  • Heavy: 71%
    Light: 29%
  • Downward breakouts
  • Heavy: 68%
    Light: 32%

-- Thomas Bulkowski

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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. If I can't fix it, it ain't broke.