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Written and copyright © 2008-2009 by Thomas N. Bulkowski. All rights reserved.
The following are the top 10 performing chart reversal and continuation patterns. A complete list of chart patterns for both bull
and bear markets is available in an Excel spreadsheet by clicking here.
Summary
By taking the average of the averages, which is
unscientific (but it does give a hint), we find that chart patterns acting as
reversals outperform those continuing to trend in both bull
and bear markets.
The following covers the top ten performers in bull markets only.
Reversals, Upward Breakouts
| Chart pattern | Average Rise |
| Flags, High and Tight, up breakout | 69% |
| Triangles, Descending, up breakout | 58% |
| Scallops, Ascending and Inverted, up breakout | 47% |
| Broadening Wedges, Ascending, up breakout | 46% |
| Rectangles Bottoms, up breakout | 46% |
| Three Rising Valleys, up breakout | 46% |
| Pipe Bottom, up breakout | 45% |
| Bump-and-Run Reversal Bottoms, up breakout | 40% |
| Double Bottoms, Eve & Eve, up breakout | 40% |
| Head-and-Shoulders Bottoms, up breakout | 38% |
Continuations, Upward Breakouts
| Chart Pattern | Average Rise |
| Diamond Bottoms, up breakout | 58%* |
| Rounding Bottoms, up breakout | 47% |
| Triangles, Descending, up breakout | 43% |
| Scallops, Ascending and Inverted, up breakout | 41% |
| Rectangles Tops, up breakout | 39% |
| Rounding Tops, up breakout | 38% |
| Triple Bottoms, up breakout | 38% |
| Broadening Wedges, Descending, up breakout | 38% |
| Broadening Wedges, Ascending, up breakout | 36% |
| Bump-and-Run Reversal Bottoms, up breakout | 36% |
* Based on fewer than 30 samples
Reversals, Downward Breakouts
| Chart Pattern | Average Decline |
| Head-and-Shoulders Tops, Complex, down breakout | 23%* |
| Islands, Long, down breakout | 23% |
| Broadening Wedges, Descending, down breakout | 22% |
| Head-and-Shoulders Tops, down breakout | 22% |
| Diamond Tops, down breakout | 22% |
| Horn Tops, down breakout | 21% |
| Bump-and-Run Reversal Tops, down breakout | 21% |
| Pipe Tops, down breakout | 20% |
| Rounding Tops, down breakout | 20% |
| Diamond Bottoms, down breakout | 19% |
* Based on fewer than 30 samples
Continuations, Downward Breakouts
| Chart Pattern | Average Decline |
| Islands, Long, down breakout | 22% |
| Diamond Bottoms, down breakout | 21% |
| Broadening Formations, Right-Angled and Descending, down breakout | 20% |
| Broadening Formations, Right-Angled and Ascending, down breakout | 20% |
| Rounding Tops, down breakout | 20% |
| Broadening Wedges, Descending, down breakout | 19% |
| Triangles, Ascending, down breakout | 19% |
| Diamond Tops, down breakout | 19%* |
| Triple Tops, down breakout | 19% |
| Pennants, down breakout | 19% |
* Based on fewer than 30 samples
Notes:
The average rise and decline is for hundreds of ‘perfect trades’ without commissions or fees
deducted. Each reversal or continuation
measures from the breakout to the ultimate high (upward breakout) or low price (
downward breakout). The ultimate high is the
highest high before price drops by at least 20%. The ultimate low is the lowest low
before price rises by at least 20%. Other
restrictions apply, but you get the idea.
-- Thomas Bulkowski
Copyright © 2008-2009 by Thomas N. Bulkowski. All rights reserved. I don’t care what star you're following! Get those camels off my lawn!
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