As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%	Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   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
Chart Pattern Indicator: on 12/5/24

As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%
Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   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
Chart Pattern Indicator: on 12/5/24

Bulkowski on the Pivot Point Reversal, Uptrend Chart Pattern

Updated with new performance information on 11/21/24.

Important Results Identification Guidelines Trading Tips Performance Statistics Performance and Failure Rates Measure Rule Trading Performance Trading Example Target Exit, Stock Performance   Target Exit, ETF Performance   Target Exit, Crypto Performance   See Also

Pivot Point Reversal, Uptrend

Pivot Point Reversal: Important Bull Market Results

Pivot Point Reversal, Uptrend: Identification Guidelines

Pivot Point Reversal, Uptrend: Trading Tips

Pivot Point Reversal, Uptrend: Performance Statistics

For the following statistics, I used 1,125 stocks, starting from January 1990 to March 2013, but few stocks covered the entire range. All stocks had a minimum price of $5. Since samples were so numerous, I used one every 25 patterns. There were two bear markets in the 2000s (as determined by the S&P 500 index), from 3/24/2000 to 10/10/2002 and 10/12/2007 to 3/6/2009. Everything outside of those dates represents a bull market.

For each pivot point reversal, I found when the trend started and when it ended. To find the trend peak or valley, I found the lowest valley and highest peak within plus or minus 10 days (21 days total) each, before the pivot point reversal and the same peak/valley test after the pivot point reversal. The closest valley or peak before the pivot point reversal is where the trend began. The closest peak or valley after the pivot point reversal is where the trend ended. I compared the peak or valley to the average of the high and low price of the pivot point reversal pattern (2nd day).

The 10-bar peak or valley number tends to find major turning points on the daily charts.

I measured performance from the day after the breakout (opening price) to the nearest trend peak or trend valley.

To determine the inbound price trend (I was looking for an up trend), I used linear regression on the average of the high-low prices in the ten days before the pattern. That caught the short-term trend.

Pivot Point Reversal, Uptrend: Performance and Failure Rates

Table 1 lists the failure rates, sorted by market condition and breakout direction along with the average rise or drop.

A failure occurs when the stock moves less than 5% in the direction of the breakout.

The failure rates may appear high, but that's typical for short-term patterns like the pivot point reversal. The highest failures occur in a bull market.

Pivot Point Reversal, Uptrend: Measure Rule

Table 2 shows how often the measure rule works. Use the measure rule to estimate of how far price is likely to rise or drop.

To do this, measure from the high to the low in the pattern to get the height. Add the height to the high or subtract it from the low to get the target.

Pivot Point Reversal, Uptrend: Trading Performance

Table 3 shows the performance based on 19,676 trades using $10 commissions per trade ($20 round trip), starting with $10,000 per trade. No other adjustments were made for interest, fees, slippage and so on.

Here's the setup.

• Find an uptrend pivot point reversal.
• Wait for price to close above the top or below the bottom of the pattern.
• Buy/short at the open the next day.
• Take profit when price moves 7% in the direction of the breakout.
• A stop placed 7% away (in the direction opposite the breakout) closes out the trade for a loss.

For example, in a bull market, the net gain was $73.56 for all trades. The method won 57% of the time and there were 3,550 winning trades. The average gain of winning trades was $698.75.

Forty-three percent, or 2,711 trades were losers. They lost an average of $745.11.

The average hold time was 29 calendar days.

Notice how the gains and losses were pegged near 7%, which is how the test was setup.

Pivot Point Reversal, Uptrend: Trading Example

The figure shows the pivot point reversal uptrend at A

Price rises leading to the pivot point reversal. At A, price closes below the prior low, confirming the reversal that began a day earlier.

The next day, B, price breaks out downward when it closes below the bottom of A.

The stock is shorted at the open of bar C.

It takes about a week before the stock resumes the downward move. Not shown is the 7% target nor the 7% stop loss locations.

Pivot Point Reversal, Uptrend: Target Exit, Stock Performance

I show a PPRU pattern in the figure, in the red box.

Entry for the upward breakout (the only direction tested) uses a buy stop placed a penny above the top of the chart pattern. A stop loss order placed a penny below the bottom of the chart pattern helps limit losses.

The target exit (sell point) is found by computing the height of the PPRU, multiplying by two, and adding it to the top of the PPRU. In this example, the stock climbs far enough to trigger a sale at the target exit.

For a more detailed explanation of the method I used to test the pattern, see the link.

Testing

As explained in the example above, I used a target exit placed twice as high as the height of the PPRU pattern added to the price of the top of the pattern. I placed a stop loss a penny below the bottom of the pattern. The uptrend benchmark uses a two-bar random pattern.

Tables 4, 5, and 6 show results for bull markets with upward breakouts and an inbound upward price trend. I used 497 stocks in the test.

Table 4. The PPRU almost doubles the benchmark performance ($87.93 versus $48.01).

Pivot Point Reversal, Uptrend: Target Exit, ETF Performance

The PPRU is highlighted by the red box on the chart. The entry is a buy stop a penny above the top of the key pattern and a stop loss order is placed a penny below the bottom of the pattern.

In this example, the entry triggers the day after the pattern ends (as shown) but it fails to reach the target. Instead, the stop loss closed out the trade.

Testing

This is the same test as the prior one except I used 94 exchange traded funds (ETFs) instead of common stocks.

Table 5. The results of the PPRU in ETFs is mediocre with gains in ETFs of $59.94 per trade versus a benchmark per-trade gain averaging $48.84.

Pivot Point Reversal, Uptrend: Target Exit, Crypto Performance

The chart on the right shows how I tested performance in cryptocurrencies.

I highlighted the PPRU in the red box. A buy stop a penny above the top of the PPRU triggers two days after the pattern ends. A stop loss placed a penny below the bottom of the pattern closes out the trade for a loss.

Testing

This is the same test as the prior one except I used 38 crypto currency stocks instead of common stocks.

Table 6. Trading this pattern in cryptocurrencies results in performance slightly better than the benchmark, $242.88 versus $214.65, respectively.

-- Thomas Bulkowski

See Also

• How did I test small patterns in stocks, ETFs, and crypto currency?
• Small pattern performance.
• Updated daily list of short patterns.
• Hook reversal, uptrend
• Hook reversal, downtrend
• Key reversal, uptrend
• Key reversal, downtrend
• Outside Days
• Inside Days
• Open-close reversal, uptrend
• Open-close reversal, downtrend
• Pivot point reversal, downtrend
• Upside weekly reversals
• Downside weekly reversals

The pope is an atheist.