As of 12/27/2024
Indus: 42,992 -333.59 -0.8%
Trans: 16,031 -73.46 -0.5%
Utils: 987 -4.51 -0.5%
Nasdaq: 19,722 -298.33 -1.5%
S&P 500: 5,971 -66.75 -1.1%
|
YTD
+14.1%
+0.8%
+12.0%
+31.4%
+25.2%
|
44,200 or 41,750 by 01/01/2025
16,700 or 15,500 by 01/15/2025
1,050 or 975 by 01/01/2025
20,500 or 19,300 by 01/01/2025
6,100 or 5,775 by 01/01/2025
|
As of 12/27/2024
Indus: 42,992 -333.59 -0.8%
Trans: 16,031 -73.46 -0.5%
Utils: 987 -4.51 -0.5%
Nasdaq: 19,722 -298.33 -1.5%
S&P 500: 5,971 -66.75 -1.1%
|
YTD
+14.1%
+0.8%
+12.0%
+31.4%
+25.2%
| |
44,200 or 41,750 by 01/01/2025
16,700 or 15,500 by 01/15/2025
1,050 or 975 by 01/01/2025
20,500 or 19,300 by 01/01/2025
6,100 or 5,775 by 01/01/2025
| ||
Statistics updated on 12/29/2020.
The third edition of this book Encyclopedia of Chart Patterns has a table in most chapters discussing busted pattern performance.
$ $ $
This article compares the performance of busted patterns with themselves and their non-busted counterparts. If you don't understand what a busted pattern in, consult the glossary.
Busted Chart Pattern | Busted Up Breakouts | Busted Down Breakouts |
---|---|---|
Big M | 38% | |
Big W | 18% | |
Broadening bottom | 25% | 42% |
Broadening formation, right-angled and ascending | 26% | 48% |
Broadening formation, right-angled and descending | 29% | 43% |
Broadening top | 29% | 47% |
Broadening wedge, ascending | 19% | 42% |
Broadening wedge, descending | 21% | 47% |
Bump and run reversal, bottom | 12% | |
Bump and run reversal, top | 22% | |
Cup with handle | 10% | |
Cup with handle, inverted | 29% | |
Diamond bottom | 22% | 35% |
Diamond top | 34% | 33% |
Double bottom, Adam & Adam | 29% | |
Double bottom, Adam & Eve | 23% | |
Double bottom, Eve & Adam | 21% | |
Double bottom, Eve & Eve | 20% | |
Double top, Adam & Adam | 44% | |
Double top, Adam & Eve | 40% | |
Double top, Eve & Adam | 44% | |
Double top, Eve & Eve | 36% | |
Head-and-shoulders bottom | 16% | |
Head-and-shoulders, complex bottom | 12% | |
Head-and-shoulders top | 32% | |
Busted Chart Pattern | Busted Up Breakouts | Busted Down Breakouts |
Head-and-shoulders, complex top | 29% | |
Island bottom | 33% | |
Island top | 39% | |
Rectangle bottom | 26% | 43% |
Rectangle top | 26% | 51% |
Roof | 32% | 39% |
Roof, inverted | 35% | 36% |
Scallop, ascending | 15% | 35% |
Scallop, inverted and ascending | 17% | |
Scallop, descending | 24% | 31% |
Scallop, descending and inverted | 20% | 28% |
Three falling peaks | 35% | |
Three rising valleys | 14% | |
Triangles, ascending | 29% | 46% |
Triangles, descending | 28% | 42% |
Triangles, Symmetrical | 32% | 48% |
Triple bottom | 23% | |
Triple top | 43% | |
V bottom | 30% | |
V top | 46% | |
Wedge, falling | 31% | 32% |
Wedge, rising | 21% | 63% |
Median | 24% | 40% |
Busted Chart Pattern | Busted Up Breakouts | Busted Down Breakouts |
The above table shows how often a chart pattern busts as a percentage of all chart patterns of the same type and breakout direction, listed alphabetically. For example, I compared how often symmetrical triangles in bull markets with downward breakouts busted compared to those symmetricals that did not bust. Almost half (48%) of them busted. Upward breakouts did better, with 32% busting. Both numbers are alarming if you're not looking to trade a busted pattern. Price will move no more than 10% in the direction of the breakout before reversing. That doesn't give you much opportunity to profit.
For upward breakouts, inverted roofs bust most often, 35% of the time. For downward breakouts, rising wedges bust most often, at 63% of the time. Ouch!
Notice that downward breakouts bust more often than upward breakouts. That's true except for diamond tops which bust 34% of the time versus 33% of the time for upward and downward breakouts, respectively.
Cup with handles with upward breakouts bust the fewest number of times, 10%, but that's probably because they tend to be tall patterns with breakouts at the top of the pattern. Bump and run reversal tops busted the fewest number of times after downward breakouts. Those patterns are tall but the breakout is closer to the middle of the chart pattern.
Of those chart patterns which bust, the table shows the frequency of each type of bust: single, double, or triple, sorted alphabetically by pattern name.
For example, when a Big M chart pattern busts, I found that 67% of them bust once, 2% double bust, and the remainder (31%) bust three or more times.
Single Bust | Double Bust | Triple+ Bust | ||||
---|---|---|---|---|---|---|
Busted Chart Pattern | Up Breakout | Down Breakout | Up Breakout | Down Breakout | Up Breakout | Down Breakout |
Big M | 67% | 2% | 31% | |||
Big W | 57% | 32% | 12% | |||
Broadening bottom | 56% | 66% | 27% | 5% | 17% | 30% |
Broadening formation, right-angled and ascending | 53% | 64% | 31% | 5% | 16% | 32% |
Broadening formation, right-angled and descending | 49% | 69% | 31% | 3% | 21% | 27% |
Broadening top | 50% | 66% | 33% | 3% | 17% | 30% |
Broadening wedge, ascending | 59% | 83% | 33% | 3% | 8% | 14% |
Broadening wedge, descending | 53% | 75% | 31% | 3% | 16% | 22% |
Bump and run reversal, bottom | 59% | 32% | 9% | |||
Bump and run reversal, top | 86% | 3% | 11% | |||
Cup with handle | 64% | 26% | 9% | |||
Cup with handle, inverted | 88% | 3% | 9% | |||
Diamond bottom | 47% | 68% | 30% | 5% | 23% | 27% |
Diamond top | 47% | 59% | 42% | 6% | 11% | 35% |
Double bottom, Adam & Adam | 55% | 29% | 16% | |||
Double bottom, Adam & Eve | 59% | 28% | 13% | |||
Double bottom, Eve & Adam | 53% | 30% | 17% | |||
Double bottom, Eve & Eve | 53% | 35% | 12% | |||
Double top, Adam & Adam | 55% | 5% | 40% | |||
Double top, Adam & Eve | 59% | 6% | 35% | |||
Double top, Eve & Adam | 65% | 3% | 32% | |||
Double top, Eve & Eve | 67% | 5% | 28% | |||
Head-and-shoulders bottom | 47% | 36% | 17% | |||
Head-and-shoulders, complex bottom | 57% | 28% | 15% | |||
Head-and-shoulders top | 67% | 3% | 30% | |||
Single Bust | Double Bust | Triple+ Bust | ||||
Busted Chart Pattern | Up Breakout | Down Breakout | Up Breakout | Down Breakout | Up Breakout | Down Breakout |
Head-and-shoulders, complex top | 63% | 5% | 32% | |||
Island bottom | 38% | 36% | 25% | |||
Island tops | 47% | 5% | 48% | |||
Rectangle bottom | 49% | 66% | 28% | 1% | 23% | 32% |
Rectangle top | 39% | 66% | 28% | 3% | 33% | 31% |
Roof | 49% | 70% | 33% | 5% | 18% | 24% |
Roof, inverted | 48% | 68% | 36% | 6% | 17% | 26% |
Scallop, ascending | 60% | 77% | 33% | 4% | 8% | 19% |
Scallop, inverted and ascending | 60% | 28% | 12% | |||
Scallop, descending | 57% | 78% | 35% | 3% | 8% | 20% |
Scallop, descending and inverted | 59% | 85% | 31% | 2% | 11% | 12% |
Three falling peaks | 78% | 4% | 18% | |||
Three rising valleys | 65% | 29% | 6% | |||
Triangles, ascending | 50% | 67% | 34% | 5% | 16% | 29% |
Triangles, descending | 45% | 71% | 33% | 5% | 23% | 24% |
Triangles, Symmetrical | 46% | 67% | 33% | 6% | 22% | 28% |
Triple bottom | 53% | 31% | 16% | |||
Triple tops | 67% | 3% | 31% | |||
V bottom | 74% | 22% | 4% | |||
V top | 84% | 5% | 11% | |||
Wedge, falling | 48% | 71% | 40% | 3% | 12% | 26% |
Wedge, rising | 54% | 76% | 26% | 3% | 21% | 22% |
Median | 53% | 67% | 31% | 4% | 16% | 28% |
Busted Chart Pattern | Up Breakout | Down Breakout | Up Breakout | Down Breakout | Up Breakout | Down Breakout |
Single Bust | Double Bust | Triple+ Bust |
Please note that the header in the two right columns have been switched from the prior tables.
The following table compares the performance of single busted patterns with the non-busted counterparts. For example, a broadening top with a downward breakout that single busts sees price rise an average of 55%. The same pattern with a non-busted upward breakout sees price rise 42%.
Another example: An Adam & Adam double bottom which single busts sees price drop an average of 27%. A double top with a non-busted downward breakout sees price drop just 15%. Notice that I'm comparing a busted double bottom with a regular double top.
The trick in comparing these numbers is that the busted pattern busts just once. In actual trading, it might bust multiple times. The second table will give you a sense of how often patterns single, double, and triple bust.
Single | -Busted | Non | -Busted | |
---|---|---|---|---|
Busted Chart Pattern | Up Breakout | Down Breakout | Down Breakout | Up Breakout |
Big M | 55% | 46% | ||
Big W | 23% | 17% | ||
Broadening bottom | 24% | 46% | 15% | 45% |
Broadening formation, right-angled and ascending | 23% | 49% | 14% | 43% |
Broadening formation, right-angled and descending | 22% | 60% | 15% | 43% |
Broadening top | 22% | 55% | 13% | 42% |
Broadening wedge, ascending | 19% | 49% | 12% | 41% |
Broadening wedge, descending | 22% | 65% | 13% | 39% |
Bump and run reversal, bottom | 19% | |||
Bump and run reversal, top | 55% | |||
Cup with handle | 21% | |||
Cup with handle, inverted | 53% | |||
Diamond bottom | 19% | 48% | 19% | 39% |
Diamond top | 22% | 58% | 17% | 29% |
Double bottom, Adam & Adam | 27% | 15% | ||
Double bottom, Adam & Eve | 24% | 16% | ||
Double bottom, Eve & Adam | 25% | 15% | ||
Double bottom, Eve & Eve | 23% | 16% | ||
Double top, Adam & Adam | 37% | 39% | ||
Double top, Adam & Eve | 52% | 43% | ||
Double top, Eve & Adam | 51% | 42% | ||
Double top, Eve & Eve | 54% | 50% | ||
Head-and-shoulders bottom | 22% | 16% | ||
Head-and-shoulders, complex bottom | 21% | 17% | ||
Head-and-shoulders top | 67% | 45% | ||
Single | -Busted | Non | -Busted | |
Busted Chart Pattern | Up Breakout | Down Breakout | Down Breakout | Up Breakout |
Head-and-shoulders, complex top | 50% | 47% | ||
Island bottom | 21% | 13% | ||
Island tops | 42% | 31% | ||
Rectangle bottom | 27% | 68% | 16% | 48% |
Rectangle top | 22% | 71% | 13% | 51% |
Roof | 25% | 49% | 15% | 34% |
Roof, inverted | 18% | 61% | 14% | 34% |
Scallop, ascending | 21% | 48% | 15% | 42% |
Scallop, inverted and ascending | 21% | 15% | ||
Scallop, descending | 20% | 54% | 16% | 39% |
Scallop, descending and inverted | 18% | 52% | 16% | 47% |
Three falling peaks | 40% | 49% | ||
Three rising valleys | 15% | 20% | ||
Triangles, ascending | 22% | 51% | 13% | 43% |
Triangles, descending | 26% | 54% | 15% | 38% |
Triangles, Symmetrical | 23% | 52% | 12% | 34% |
Triple bottom | 23% | 14% | ||
Triple tops | 60% | 46% | ||
V bottom | 22% | 15% | ||
V top | 48% | 40% | ||
Wedge, falling | 21% | 53% | 14% | 38% |
Wedge, rising | 23% | 56% | 9% | 38% |
Median | 23% | 53% | 15% | 42% |
Single | -Busted | Non | -Busted | |
Busted Chart Pattern | Up Breakout | Down Breakout | Down Breakout | Up Breakout |
-- Thomas Bulkowski
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