As of 01/17/2025   Indus: 43,488 +334.70 +0.8%     Trans: 16,431 -169.75 -1.0%     Utils: 1,013 +1.53 +0.2%     Nasdaq: 19,630 +291.91 +1.5%     S&P 500: 5,997 +59.32 +1.0%	YTD  +2.2%    +3.4%    +3.0%    +1.7%    +2.0%	Targets    Overview: 01/15/2025     44,700 or 41,600 by 02/01/2025   17,200 or 15,700 by 02/01/2025   1,050 or 950 by 02/01/2025   20,500 or 18,670 by 02/01/2025   6,100 or 5,700 by 02/01/2025
Chart Pattern Indicator: on 1/13/25

As of 01/17/2025   Indus: 43,488 +334.70 +0.8%     Trans: 16,431 -169.75 -1.0%     Utils: 1,013 +1.53 +0.2%     Nasdaq: 19,630 +291.91 +1.5%     S&P 500: 5,997 +59.32 +1.0%	YTD  +2.2%    +3.4%    +3.0%    +1.7%    +2.0%
Targets    Overview: 01/15/2025     44,700 or 41,600 by 02/01/2025   17,200 or 15,700 by 02/01/2025   1,050 or 950 by 02/01/2025   20,500 or 18,670 by 02/01/2025   6,100 or 5,700 by 02/01/2025
Chart Pattern Indicator: on 1/13/25

Bulkowski on Small Pattern Performance

Completed target exit update on 1/10/2025. As of 1/17, I'll be adding more patterns to the Target Exit tables.

This article compares the performance of small chart patterns. I don't have a definition of what a "small" chart pattern is, but I include those that are a few bars wide. The longest, is the NR7, which is seven bars long. Some (horns, pipes, and weekly reversals) use the weekly scale.

• Target exit notes, summary  
• Target exit performance in stocks  
• Target exit performance in ETFs  
• Target exit performance in cryptocurrency  
• Upward breakouts, bull markets
• Downward breakouts, bull markets
• See Also.

Small Patterns: Target Exit Notes and Summary

Tables 1, 2, and 3 shows metrics related to small price patterns based on how well they reach a price target. The target is twice the height of the pattern added to the top of the pattern. A stop loss order placed a penny below the bottom of the pattern represents a sell signal. Commission were $0.

Terms

See the individual pattern for more details.

Summary

• In stocks, long patterns (more price bars in short patterns) in downtrends underperform.
• In ETFs, patterns in uptrends underperform.
• In cryptocurrency, long patterns (more price bars in short patterns) in uptrends underperform.
• In two of three categories, short patterns may not outperform but they will tend to do better than long patterns.

Small Patterns: Target Exit Performance in Stocks

Table 1 shows the small pattern performance in stocks.

Notes: * Uses a one-bar delay on entry to be comparable.

Findings

If you split the table in half, the top 15 entries (1 to 15, with number 16 not counted) for the number of price bars total 29. The bottom half (17 to 31) total 42. It means that more price bars in a pattern result in worse performance.

For the price short trend (5 days) leading to the start of the pattern, the top half of the table shows a split between downtrends (7) and uptrends (8), so it's a tie. The bottom half of the table shows downtrends (12) overwhelming uptrends (3). Because the patterns all have upward breakouts (those are the ones I tested), we know that a pattern in a short downtrend will act as a reversal (from downtrend to upward breakout) and an uptrend will be a continuation pattern. We can say that good performance isn't associated with either a short-term up or down trend, but poor performance tends to lean toward patterns that act as reversals (downtrends to upward breakouts).

Small Patterns: Target Exit Performance in ETFs

Table 2 shows the small pattern performance in exchange traded funds.

Notes: * Uses a one-bar delay on entry to be comparable.

Findings

Small patterns in ETFs show similar performance to stocks. Downtrends and uptrend in the top half of the table show no favorites (8 are best in downtrends, 7 in uptrends). The bottom half of the table shows uptrends populating the results 10 times and downtrends appearing 5 times. For worse performing small patterns, look for those which act as continuation patterns (upward price trend with an upward breakout).

In terms of price bars, the top half of the table total 36 bars and the bottom half total 33, so there's no overwhelming consensus of a winner. Short and long patterns distribute about evenly across the table.

Small Patterns: Target Exit Performance in Cryptocurrency

Table 3 shows the small pattern performance in cryptocurrency.

Findings

For small patterns in cryptocurrencies, the top half of the table (1 to 9) total 4 in downtrends and 5 in uptrends. The lower half of the table (11 to 19) show 3 in downtrends and 8 in uptrends. In other words, poor performance relates to small patterns that act as continuation patterns (uptrend and upward breakout).

The total bar count for the top half of the table is 18 and it's 34 for the lower half. In other words, longer patterns tend to underperform.

Small Patterns: Upward Breakout Performance

Table 4 shows the performance of small chart patterns based on the average gain.

In the tests of each pattern, I used a 7% gain for the profit exit and a 7% drop as the loss exit. In other words, after entering a trade, I set a profit target of 7% above the entry price. If the stock climbed 7%, the stock was sold for a 7% gain less $20 round trip commissions ($10 each way).

If the stock broke out upward but then dropped, the position was sold if the stock dropped 7% from the buy price. Averaging the results for all trades using the pattern gave the average gain, which I show.

The percent wins column is the percentage of times the chart pattern won.

The hold time is the duration of the trade, in calendar days.

The rank is a number for 1 (best), sorted by the average gain.

As the table shows, small patterns are not huge winners. Each trade began with $10,000, so they won $680 or lost $720 (it should be $700 each except for commissions and slippage).

Trades could make more or lose more if the stock gapped higher or lower.

Notice that the average gain is tiny -- $132 -- compared to $700 (a 7% gain).

Small Patterns: Downward Breakout Performance

Table 5 uses the same method as Table 4 except that the patterns listed had downward breakouts. That is, all trades began with $10,000. All shorted the stock and looked for price to drop 7% in a bull market. If it did not, a stop placed 7% above the entry price closed out the trade for a loss.

Commissions were $10 per trade or $20 round trip.

In this case, the average gain column actually shows a loss on every pattern! In other words, none of the chart patterns made money by shorting the stock.

-- Thomas Bulkowski

See Also

• A daily list of small chart patterns found.
• How did I test small patterns in stocks, ETFs, and crypto currency?
• Rank of other chart patterns
• Visit the visual chart pattern index to hunt for other chart patterns.
• The alphabetical chart pattern index covers more topics than the visual index.
• What do you know about event patterns?
• If you prefer candlesticks, then visit over 100 of them in the alphabetical index.
• Click to view the visual candlestick index to make identification easier.