As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%	Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%
Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

Bulkowski on the Pivot Point Reversal, Uptrend Chart Pattern

Important Results Identification Guidelines Trading Tips Performance Statistics Performance and Failure Rates Measure Rule Trading Performance Trading Example 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.

-- Thomas Bulkowski

See Also

• Bearish reversal tests: Compare performance of short-term reversals.
• Closing price reversal, uptrend
• Gap2H
• Inverted gap2H
• Upside weekly reversals
• Downside weekly reversals
• Outside Days
• Inside Days
• Shark-32

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