As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%	Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%
Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

Bulkowski on Small Pattern Performance

2/21/2025. Fixed a mistake with horn bottoms. Rank has been adjusted.

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.

• Performance summary
• Target exit notes
• 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.

Performance Findings Summary

• In stocks, small patterns (up to 7 price bars) with more price bars underperform. Patterns that act as reversals of the downtrend underperform.
• In ETFs, reversals outperform continuation patterns, which is the opposite of what we see for stocks.
• In cryptocurrency, long patterns (more price bars in short patterns) in uptrends and continuation patterns underperform.
• In two of three categories (ETFs, cryptocurrency), patterns acting as continuations (upward price trend leading to an upward breakout from the pattern) will tend to underperform.
• I copied all tables to a spreadsheet. Because crypto has the fewest entries (26), I took the top 13 entries (half of each table) and sorted them by stocks, ETFs, and cryptocurrency ratios (which is the ratio of profit per trade versus the benchmark). I split the resulting table in two (to find the best performers by security type). I found that stocks were the best performers 12 times, ETFs appeared 5 times, and cryptocurrency appeared 3 times. If you want to trade small patterns, then trade them in stocks.

The top ten small patterns showing the best performance are these.

Notes:

Ratio is the ratio of average profit per trade divided by the benchmark's average profit per trade. The higher the ratio, the better.

Inbound trend is the slope of the line found using linear regression on the (high+low)/2 prices for the 5 days before the start of the pattern.

Small Patterns: Target Exit Notes

Tables 1, 2, and 3 shows metrics related to small price patterns based on how well they reach a price target in bull markets. 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. All patterns used upward breakouts only even if they are supposed to be bearish (downward breakouts). See Methodology for more testing details.

Terms

See the individual pattern for more details.

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 22 entries (1 to 22) for the number of price bars total 45. The bottom half (23 to 44) total 70. It means that more price bars in a pattern results in worse performance.

For the very short-term price trend (5 days long) leading to the start of the pattern, the top half of the table shows a split between downtrends (11) and uptrends (11), so it's a tie.

The bottom half of the table shows downtrends (17) overwhelming uptrends (5). Because the patterns all have upward breakouts (those are the ones I tested and reported in the table), 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.

** Performance is based on few samples, so don't believe the results.

Findings

In terms of price bars, the top half of the table total 56 bars and the bottom half total 51, so there's no overwhelming consensus of a winner. Short and long patterns distribute about evenly across the table.

Small patterns in ETFs show the opposite performance of stocks. Downs and uptrends in the top half of the table favor downtrends (12 are best in downtrends, 9 in uptrends). That says reversals outperform continuation patterns in ETFs (meaning a downward inbound price trend with an upward breakout).

The bottom half of the table shows uptrends populating the results 11 times and downtrends appearing 10 times. That's a tie.

Small Patterns: Target Exit Performance in Cryptocurrency

Table 3 shows the small pattern performance in cryptocurrency.

Findings

The total bar count for the top half of the table is 31 and it's 41 for the lower half. In other words, longer patterns (more price bars) tend to underperform.

For small patterns in cryptocurrencies, the top half of the table (1 to 13) total 6 in downtrends and 7 in uptrends (a tie).

The lower half of the table (14 to 26) show 4 in downtrends and 9 in uptrends. In other words, poor performance relates to small patterns that act as continuation patterns (uptrend leading to the pattern and an upward breakout).

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

• Small pattern performance, sorted by % hitting target.
• List of small patterns, sorted by price bars in the pattern.
• Small patterns found, updated daily.
• 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.