As of 05/13/2022
Indus: 32,197 +466.36 +1.5%
Trans: 14,456 +136.14 +1.0%
Utils: 993 +9.90 +1.0%
Nasdaq: 11,805 +434.04 +3.8%
S&P 500: 4,024 +93.81 +2.4%
|
YTD
-11.4%
-12.3%
+1.2%
-24.5%
-15.6%
|
 33,500 or 30,500 by 06/01/202216,300 or 13,900 by 05/15/2022 950 or 1,100 by 05/15/202212,800 or 11,000 by 06/01/20224,250 or 3,850 by 06/01/2022 |
As of 05/13/2022
Indus: 32,197 +466.36 +1.5%
Trans: 14,456 +136.14 +1.0%
Utils: 993 +9.90 +1.0%
Nasdaq: 11,805 +434.04 +3.8%
S&P 500: 4,024 +93.81 +2.4%
|
YTD
-11.4%
-12.3%
+1.2%
-24.5%
-15.6%
| |
|
33,500 or 30,500 by 06/01/202216,300 or 13,900 by 05/15/2022950 or 1,100 by 05/15/202212,800 or 11,000 by 06/01/20224,250 or 3,850 by 06/01/2022 | ||
Released 12/21/2020.
The inverted V pivot is a 3-bar pattern based on Vicky Wong's V pivot except that it's flipped upside down. I tested the performance of the pattern and present the results below.
Inverted V Pivot
|
Inverted V Pivot: Important Bull Market ResultsOverall performance rank (1 is best): Not ranked but it would place first out of three (weekly patterns). It's a 3-way tie.
Break even failure rate: 11%
Average drop: 19%
Percentage meeting price target: 41%
The above numbers are based on almost 1,400 perfect trades on the weekly scale. See the glossary for definitions. |
Refer to the image to the right of the table.
| Characteristic | Discussion |  |
| Weekly chart | Use the weekly chart to locate V pivots. | |
| Price trend | Usually (63% of the time) upward leading to the pattern. | |
| Shape | Looks like an inverted V, a 3-bar pattern with the middle bar (2) above the adjacent ones (1, 3), as shown in the picture to the right. | |
| Percentages | For identification, I put a 2% minimum on each price bar. By that, I mean the high price of bar 2 is at least 2% above the high prices of bars 1 and 3. | |
| Confirmation | The pattern confirms as valid when price closes below the lowest price of the three bars. In this example, that means a close below bar 3. |
| Trading Tactic | Explanation | 
The Measure Rule
|
| Measure rule | See the Measure Rule figure to the right. Compute the height from the lowest price (point B) to the highest price (A) in the 3-week pattern. Subtract the height from the bottom of the pattern (B) to get the price target (C). Price reaches the target 41% of the time on average, so be conservative in your projections. | |
| Uptrends | Inverted V pivots will usually (63% act as reversals of the uptrend) mark the end of a short-term uptrend. The images in this article provide examples. | |
| Breakout | A breakout occurs when price closes below the lowest price bar in the 3-bar pattern. In the figure, that means a close below B. | |
| Confirmation | The pattern confirms as valid when price breaks out downward. Because the pattern is short, place an order to short the stock a penny below the lowest bar in the 3-bar pattern. That way, you'll enter a trade with less slippage. |
Here is a slider show of three examples.
On this chart, I highlight the inverted V pivot (A) in the inset. In this example, price constructs a skyscraper which towers over the landscape. The 3-bar pattern (weekly chart, by the way) obeys the identification guidelines. The center peak is more than 2% above the surrounding ones. It may not look as if price drops much, but minor price changes can be huge on this price scale.
Patterns B and C signal more of a downtrend to happen. There are other inverted V pivots not shown on this chart. In fact, the pattern is prolific. I only catalogued one of every 5 patterns.
This chart shows all of the valid inverted V pivots I found. Pivot B calls the downward reversal exactly. The others act as continuation or reversal patterns.
The inverted V pivot at A looks like it doesn't confirm, but it does. Price closes a penny below the last bar in the 3-bar pattern the week after the pattern ends but that's as far as price drops. Price resumes the upward trend thereafter.
-- Thomas Bulkowski
See Also
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