As of 10/07/2024
  Indus: 41,954 -398.51 -0.9%  
  Trans: 15,783 -31.37 -0.2%  
  Utils: 1,027 -24.05 -2.3%  
  Nasdaq: 17,924 -213.95 -1.2%  
  S&P 500: 5,696 -55.13 -1.0%  
YTD
 +11.3%  
-0.7%  
 +16.5%  
 +19.4%  
 +19.4%  
  Targets    Overview: 09/30/2024  
  Up arrow43,500 or 41,600 by 10/15/2024
  Up arrow16,800 or 15,700 by 10/15/2024
  Up arrow1,125 or 1,025 by 10/15/2024
  Up arrow19,000 or 17,600 by 10/15/2024
  Up arrow5,900 or 5,600 by 10/15/2024
As of 10/07/2024
  Indus: 41,954 -398.51 -0.9%  
  Trans: 15,783 -31.37 -0.2%  
  Utils: 1,027 -24.05 -2.3%  
  Nasdaq: 17,924 -213.95 -1.2%  
  S&P 500: 5,696 -55.13 -1.0%  
YTD
 +11.3%  
-0.7%  
 +16.5%  
 +19.4%  
 +19.4%  
  Targets    Overview: 09/30/2024  
  Up arrow43,500 or 41,600 by 10/15/2024
  Up arrow16,800 or 15,700 by 10/15/2024
  Up arrow1,125 or 1,025 by 10/15/2024
  Up arrow19,000 or 17,600 by 10/15/2024
  Up arrow5,900 or 5,600 by 10/15/2024

Bulkowski on Pattern Pairs: Right-Angled and Ascending Broadening Formations

Initial release: 12/15/2021.

Because "right-angled and ascending broadening formation" is so long, I've abbreviated it to RABFA.

The idea behind pattern pairs is to pick a chart pattern type (like broadening bottoms with upward breakouts) to buy and another to sell (like double tops). You buy the upward breakout from the broadening bottom, hold for a few years, and sell when a double top appears and breaks out downward. Along the way, you give price a chance to rise far enough to overcome those trades which are stopped out for a loss. This is a trend-following strategy.

Trading RABFAs: Summary

Picture of the pattern pairs.

The figure illustrates the idea for trading pattern pairs, where price is the red line and the boxes are chart patterns. This articles assumes you buy an upward breakout from either an RABFA or a busted one (price breaks out downward, drops no more than 10%, reverses, and closes above the top of the pattern. Buy as price rises above the top of the pattern).

On the sale side, you can sell the first bearish chart pattern which comes along or wait for your favorite bearish chart pattern to appear and sell then.

Here's a list of the top five performing sell signals, based on annualized gain (annualized because the hold time is often years, in parenthesis).

Sell a...

The following list shows the expected performance of chart pattern pairs, ranked by their expectancy. Expectancy is a way of gauging winning and losing trades and how much money you might make trading a pattern pair. I put the expected profit per trade, per share, in parenthesis.

To improve performance, try these tips.

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Trading RABFAs: Entry and Exit Conditions

The databases I built over several decades doesn't identify every chart pattern. There may be plenty of double tops over the years, for example, that I didn't catalog on the way to the one I did catalog. So buying an upward breakout from a RABFA and selling at the double top I cataloged would be different than choosing to sell a different double top. However, the following analysis does give a real-world flavor for how well you might do trading chart patterns if you follow the pattern pair strategy.

Here's what I used in my analysis.

I used the following 43 chart patterns in the analysis, but some only applied if they were busted.

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Trading RABFAs: Stops

I used a stop loss order set a penny below the bottom of the chart pattern. Price on the way down may have gapped below the stop price (for the sale price), so I used the lower of the stop price or the opening price on the day of sale).

For trailing stops, I removed the stop loss order and used a trailing stop set at 10%, 15%, 20%, or 25% below a peak, never lowering the stop value, but raising it if a higher peak came along during the trade.

In Table 1, I calculated the percentage net gain (the average of gains and losses) when using various trailing stop loss amounts (10%, 15%, 20%, and 25%) for all tested chart patterns according to the busted/non-busted buy/sell configuration. In parenthesis is the size of the average loss so I could detail how losses change with various stop loss orders.

For example, if I tested non-busted RABFAs and sold various non-busted patterns (ascending triangles, broadening tops, head-and-shoulders tops, and so on), I made an average of 63% ("Stop Loss Only" column) after having a stop loss order in place. Losses averaged 12%. Replacing the stop loss with a 10% trailing stop cut the gain to 5% but also trimmed the average loss to 5%. Using a 25% trailing stop allowed me to keep more money, 29%, but losses climbed to 15%. If I didn't use any type of stop, the gain averaged 169% with losses averaging 27%.

The results show that trades which do not use a stop make the most money but losses are huge. Buying non-busted patterns outperformed busted ones.

Table 1: Various Trailing Stop Settings: Net Profit and (Average Loss)
Data 10%  15%  20%  25%  Stop Loss 
Only
 No Stop
Non-busted buys, non-busted sales 5% (-5%)  10% (-9%)  18% (-12%)  29% (-15%)  63% (-12%)  169% (-27%) 
Busted buys, non-busted sales 1% (-7%)  4% (-8%)  12% (-12%)  13% (-16%)  12% (-11%)  71% (-28%) 
Non-busted buys, busted sales 5% (-5%)  10% (-8%)  16% (-12%)  22% (-15%)  61% (-11%)  156% (-26%) 
Busted buys, busted sales 1% (-6%)  3% (-8%)  11% (-12%)  12% (-17%)  10% (-11%)  88% (-27%) 

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Trading RABFAs: Busted Patterns

Table 2 shows what I found when comparing the performance of non-busted patterns (both buy and sell) with busted and non-busted chart patterns. In 22 or 31 contests (up to 31 different chart pattern types, depending on which apply), I compared the three combinations of busted and non-busted buy and sell signals to non-busted buy and sell signals. The table below shows the percentage of time the busted combination beat the non-busted combination in the contests.

I found that the highest rate of success for busted patterns was 36%. If you used a non-busted RABFA for buying and sold a busted pattern (of your choice), you'd have a successful trade about a third of the time.

According to the contest results, do not trade using busted chart patterns.

Table 2: Busted or Non-Busted Contest Winners
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted patternN/A (benchmark)36%
Buy busted pattern0%5%

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Trading RABFAs: Non-busted Buy, Non-Busted Sale

Picture of a busted pattern pair.

Table 3 shows statistics I collected for RABFAs using the trading rules described above and shown in the figure. A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

For example, if you were to buy the upward breakout from a RABFA chart pattern and hold it until you encountered a broadening bottom (the first chart pattern listed in the table), but one with a downward breakout, you'd net an average of 43% on the 175 (43 winners, 132 losers) trades. That's an average of 214% on your winners, 13% average loss on your losers. You'd find that only 25% of the trades made money but you'd gain an average of 21% per year (ranking 25th where 1 is best). If you removed the stop loss order and just held on until the broadening bottom with a downward breakout appeared, you'd double your money (101% per trade).

The expectancy averaged $2.53 per share per trade which ranks 40th where 1 is the best value. It suggests you'll have a hard time making money by trading this pair.

Notes: The rank is based on the net gain for all four performance tables (tables 3 to 6) shown below. Trades with sample counts below 30 are not ranked.

Table 3: Statistics for RABFAs
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Broadening bottom214%-13%43%21%25101%43/13225%$2.5340
Broadening top259%-11%73%31%8123%102/22631%$4.7817
Broadening formation, right-angled and ascending157%-11%42%18%3661%50/10931%$2.9035
Broadening formation, right-angled and descending225%-13%60%24%16103%35/7931%$2.6138
Broadening wedge, ascending159%-12%40%25%14112%32/7330%$1.9142
Broadening wedge, descending179%-13%38%18%3878%26/7127%$3.2230
Bump-and-run reversal top322%-11%115%56%3161%118/19238%$7.785
Diamond bottom296%-11%72%29%10113%13/3527%$2.9833
Diamond top163%-12%38%15%4386%32/8029%$2.5339
Adam & Adam double top311%-11%71%25%15181%175/51026%$7.477
Adam & Eve double top244%-12%60%21%22133%89/22728%$7.666
Eve & Adam double top414%-12%123%46%7209%102/21932%$7.158
Eve & Eve double top585%-11%153%57%2244%109/28628%$10.852
Falling wedge162%-11%32%15%4956%26/7925%-$0.4178
Head-and-shoulders top196%-12%45%20%27114%297/78228%$4.1623
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Head-and-shoulders, complex top118%-12%22%12%5583%57/16026%$1.1056
Rectangle top136%-12%36%16%4285%66/13932%$4.4821
Rising wedge162%-12%43%20%28110%107/23032%$2.8436
Rounding top155%-12%30%12%5781%47/13925%$1.8544
Ascending scallop231%-12%36%20%2962%14/5720%-$0.5581
Descending scallop220%-12%55%23%20116%140/34729%$3.7626
Scallop, inverted and ascending1098%-13%285%137%1356%15/4127%$11.241
Scallop, descending and inverted220%-12%43%23%1988%77/25024%$0.4967
Triangle, ascending186%-12%39%18%3795%47/13426%$3.6727
Triangle, descending192%-12%34%16%4180%43/14823%$0.8459
Triangle, symmetrical245%-13%50%24%18107%139/43624%$2.9634
Triple top238%-12%61%24%17123%262/63729%$5.4713
Rectangle bottom276%-15%25%15%4746%18/11314%-$3.4393
3 falling peaks295%-12%74%30%9147%251/64628%$4.1722
Roof185%-11%48%21%23112%15/3530%$3.5528
Roof, inverted192%-12%58%21%24154%26/5034%$3.5029
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank

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Trading RABFAs: Busted Buy, Non-Busted Sale

Picture of a busted pattern pair.

The figure shows the setup for this scenario. When price busts the bearish chart pattern (busts a downward breakout from a RABFA in a bull market), buy. Sell after a downward breakout from the target chart pattern.

Table 4 shows the performance of busted RABFAs for the entry and sales after downward breakouts from various bearish chart patterns. A stop loss order was used and priced a penny below the bottom of the pattern (after buying).

A busted RABFA has a downward breakout but price drops no more than 10% before reversing and moving above the top of the pattern. Buy when price moves at least a penny above the top of the busted pattern. Sell after price drops at least a penny below the target chart pattern.

For example, buying a RABFA with a busted downward breakout in a bull market (the entry price is really the higher of a penny above the top of the pattern or the opening price) and selling after the downward breakout from a broadening top shows winners averaging gains of 87%. Losses average 12%, for a net of 8%. Only 54 trades occurred with a win/loss ratio of 20%. This scenario ranks the annualized net gain as 80th among the four tables. If you traded this as a buy-and-hold position, meaning no stops were used, the net gain climbed to 52%. Expectancy was a loss of $0.21 per share, ranking 74th where 1 is best. Because the expectancy is negative, you wouldn't want to trade this pattern pair.

Trades with sample counts below 30 are not ranked.

Table 4: Statistics for Busted Buys, Normal Sales
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Broadening bottom87%-12%8%5%8052%11/4320%-$0.2174
Broadening top111%-11%16%11%6164%20/7022%$1.6845
Broadening formation, right-angled and ascending66%-14%7%4%8334%13/3726%-$0.5280
Broadening formation, right-angled and descending128%-10%7%9%6752%4/2813%-$2.8392
Broadening wedge, ascending68%-8%5%8%6933%6/2818%$1.3651
Broadening wedge, descending58%-8%0%0%9142%4/2713%-$0.5682
Bump-and-run reversal top101%-10%16%19%3290%26/8424%$0.6263
Diamond bottom72%-11%21%29%5/838%
Diamond top86%-11%13%7%7655%12/3724%$1.4950
Adam & Adam double top168%-10%21%14%50120%37/17517%$1.5747
Adam & Eve double top128%-11%11%6%79132%16/8416%$0.5166
Eve & Adam double top102%-10%16%10%64103%24/8023%$1.1554
Eve & Eve double top112%-11%12%8%70113%27/11519%$0.2968
Falling wedge115%-12%12%7%7341%7/2919%-$0.6383
Head-and-shoulders top126%-9%17%12%5896%75/31619%$1.2152
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Head-and-shoulders, complex top70%-11%2%2%8739%11/5517%$0.0871
Rectangle top159%-11%15%11%6286%10/5615%-$0.7984
Rising wedge86%-10%10%7%7590%22/8521%$0.5365
Rounding top103%-11%3%2%8867%8/6012%-$1.6087
Ascending scallop29%-10%-5%37%3/2113%
Descending scallop78%-11%-1%-1%9274%17/13311%-$1.8088
Scallop, inverted and ascendingNone-9%-9%78%0/130%
Scallop, descending and inverted79%-12%8%6%7746%20/7421%-$0.0372
Triangle, ascending123%-10%18%15%4661%13/4921%$0.2669
Triangle, descending93%-11%18%11%6348%22/5628%$0.9857
Triangle, symmetrical90%-11%8%7%7458%33/14419%$0.1670
Triple top161%-10%27%18%3592%55/20121%$2.4141
Rectangle bottom43%-11%-9%-22%94-7%1/303%-$3.5894
3 falling peaks77%-11%1%1%8969%36/22514%-$0.3576
Roof14%-11%-2%46%7/1335%
Roof, invertedNone-10%-10%95%0/240%
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank

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Trading RABFAs: Non-busted Buy, Busted Sale

Picture of a busted pattern pair.

The figure shows an example of how this trade unfolds.

A bullish chart pattern appears and you buy at the breakout. Continue holding until your selected chart pattern appears. The chart pattern is bullish because it has an upward breakout but then things go wrong. Price reverses. Sell when the stock dips below the bottom of the chart pattern (meaning it busts the upward breakout).

Table 5 shows the performance statistics for this setup (buying a normal RABFA and selling only after a busted chart pattern appears). A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

For example, buying a RABFA with an upward breakout in a bull market and selling a busted broadening top shows winning trades making an average of 188%. Losing trades lost 11% giving a net gain of 18%. The annualized gain is 8% in this case, giving the setup a rank of 68 (where 1 is best). If you traded this without a stop, the net gain climbed to 48%. Of the stocks I looked at, I found 76 trades with 14% of them winning. Expectancy was $1.49 per share, ranking 49th where 1 is best.

Trades with sample counts below 30 are not ranked.

Table 5: Statistics for Normal Buy, Busted Sale
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Broadening bottom188%-11%18%8%6848%11/6514%$1.4949
Broadening top157%-10%37%15%4487%35/9028%$2.7237
Broadening formation, right-angled and ascending82%-10%12%8%7188%14/4524%$1.9043
Broadening formation, right-angled and descending103%-10%20%10%6547%20/5427%$1.6446
Broadening wedge, ascending140%-9%42%13%54110%11/2134%$6.0412
Broadening wedge, descending221%-10%59%26%1383%12/2830%$4.6320
Bump-and-run reversal bottom152%-9%41%12%5688%13/2931%$6.1110
Cup with handle121%-9%34%18%3393%11/2233%$5.0415
Diamond bottom200%-12%25%11%5957%7/3318%$1.1055
Diamond top347%-9%32%21%26106%6/4612%-$0.1473
Adam & Adam double bottom233%-11%47%15%48127%52/16724%$5.0316
Adam & Eve double bottom282%-13%60%18%39137%25/7625%$4.0924
Eve & Adam double bottom377%-12%86%27%12159%23/6925%$6.0511
Eve & Eve double bottom183%-12%28%14%51110%13/5021%$3.1632
Falling wedge72%-12%4%3%8672%8/3519%-$0.2275
Head-and-shoulders bottom178%-11%40%16%4080%64/17627%$3.1931
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Head-and-shoulders complex bottom53%-10%8%6%7875%13/3130%-$1.9190
Rectangle top376%-10%138%51%6176%35/5638%$6.419
Rising wedge214%-10%63%28%11141%24/4933%$0.6662
Round bottom60%-10%5%6%4/1422%
Rounding top403%-12%104%112%7/1828%
Ascending scallop112%-12%29%13%5388%27/5433%$0.7961
Descending scallop190%-11%31%15%4565%7/2721%$4.6719
Scallop, inverted and ascending119%-11%23%14%5282%29/8326%$1.1853
Scallop, descending and inverted164%-11%32%11%6067%10/3124%$0.8558
Triangle, ascending117%-12%17%8%7277%18/6223%-$0.8085
Triangle, descending144%-10%23%10%6690%21/7622%$1.5548
Triangle, symmetrical238%-11%58%22%21127%73/19228%$5.1814
Triple bottom592%-12%132%56%4184%70/22524%$8.534
Rectangle bottom259%-12%38%18%3457%9/4018%$3.8625
3 rising valleys611%-11%158%56%5223%55/14727%$8.633
Roof187%-15%63%196%5/838%
Roof, inverted146%-11%56%72%12/1643%
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank

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Trading RABFAs: Busted Buy, Busted Sale

Picture of a busted pattern pair.

Table 6 shows the last combination of trading statistics. It shows busted RABFAs as the entry signal and various busted chart patterns as the exit signal. A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

The associated figure shows the setup.

For example, buying a busted RABFA and selling a busted broadening top made 165% from the winners, lost 9% on the losers for a net gain of 39%. Annualized, it was 20%. The net gain placed the performance of this setup at 31, where a rank of 1 is best. Removing stops from the trades allowed them to make 139%. Only 43 trades were taken and 28% of them were winners. Expectancy was a gain of $4.68 per share, ranking 18th among the four tables.

Trades with sample counts below 30 are not ranked.


Table 6: Statistics for Busted Buys and Sales
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Broadening bottom31%-11%-3%30%3/1319%
Broadening top165%-9%39%20%31139%12/3128%$4.6818
Broadening formation, right-angled and ascending31%-9%0%45%3/1023%
Broadening formation, right-angled and descending133%-9%11%113%3/1814%
Broadening wedge, ascending103%-11%23%97%3/730%
Broadening wedge, descending59%-11%-4%15%2/1810%
Bump-and-run reversal bottomNone-10%-10%4%0/70%
Cup with handleNone-14%-14%18%0/90%
Diamond bottom171%-8%43%59%2/529%
Diamond top56%-6%18%175%5/838%
Adam & Adam double bottom99%-11%5%3%85109%12/6915%-$0.4077
Adam & Eve double bottom51%-13%-6%-5%9391%5/4011%-$1.8389
Eve & Adam double bottom65%-10%1%0%90155%5/3014%-$1.5686
Eve & Eve double bottom133%-13%23%70%7/2125%
Falling wedge83%-8%-2%136%1/147%
Head-and-shoulders complex bottom17%-18%-14%-8%1/910%
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank
Rectangle top64%-9%3%5%8235%5/2716%-$2.1591
Rising wedge59%-10%9%143%4/1127%
Round bottomNone-14%-14%53%0/40%
Rounding top172%-6%65%79%2/340%
Ascending scallop286%-12%29%67%3/1914%
Descending scallopNone-9%-9%11%0/100%
Scallop, inverted and ascending65%-12%-3%58%3/2212%
Scallop, descending and inverted90%-10%5%54%2/1115%
Triangle, ascending100%-11%21%71%6/1529%
Triangle, descending139%-11%14%78%4/2017%
Triangle, symmetrical219%-10%21%20%3092%14/9013%$0.8460
Triple bottom69%-9%2%3%8482%14/7915%-$0.4879
Rectangle bottomNone-10%-10%187%0/80%
3 rising valleys96%-10%6%5%8194%8/4615%$0.5964
RoofNone-12%-12%-38%0/30%
Roof, inverted50%-8%1%53%2/1017%
Sell PatternAverage
Win
Average
Loss
NetAnnualized
Net
RankNo Stop
Net
Win/Loss
Samples
Win
Loss
Average
Expectancy
Expectancy
Rank

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Trading RABFAs: Performance Improvements

Here are a few ideas the data suggested which may improve performance of your pattern pairs trading.

Trend Start: Short, Medium, or Long

Find the trend start for your chart pattern. Often you can just look at a chart and see where the trend begins. If not, or you want to be sure, then the glossary describes how to find it.

Determine the length from the trend start to the pattern's start: short term (less than 3 months), medium term (3 to 6 months) or long term (more than 6 months).

Table 7 shows the results for the four combinations of busted/non-busted trades and the resulting performance.

Buying non-busted patterns with a short-term (up to 3 months) duration from the trend start to the pattern's start results in better performance. Busted patterns do best using a long-term (more than 6 months) duration from the trend start.

Table 7: Short (S) Medium (M) or Long (L) Trend Start and Performance
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted patternS104% M28% L23%S110% M28% L23%
Buy busted patternS10% M-3% L21%S13% M-5% L14%

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Moving Averages: 50- and 200-Day SMA

I checked two moving averages at buy time, 50- and 200-day simple moving averages (not as a crossover setup). I compared the breakout price to the value of the moving average. Table 8 shows the performance of buying or selling busted or non-busted patterns when the breakout price was above (A) or below (B) the 50-day simple moving average (SMA).

In all cases, buy RABFAs when the breakout price is above the 50-day SMA.

Table 8: Above (A) Below (B) 50-Day Simple Moving Average
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted patternA68% B12%A66% B8%
Buy busted patternA14% B-5%A14% B-5%

Table 9 shows the results of using a longer moving average, the 200-day. Traders often use this as a proxy for the long-term trend.

In all cases, buy RABFAs when the breakout price is above the 200-day SMA.

Table 9: Above (A) Below (B) 200-Day Simple Moving Average
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted patternA71% B29%A66% B34%
Buy busted patternA13% B2%A13% B2%

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Selling First Bearish Chart Pattern

The prior discussion assumes you buy an RABFA (busted or non-busted) but sell a chart pattern of your choosing, such as a downward breakout from a head-and-shoulders top (you wait for one to appear). What if you sold the first bearish chart pattern which comes along? How would you do?

Table 10 shows the results sorted by the type of patterns involved (busted or non-busted). For example, if you buy a non-busted RABFA and sell the first non-busted chart pattern which comes along, you'd make 23% on average. Annualized, you'd make 44%. This compares to a 27% annualized gain if you sell a designated pattern (like you waited for a double top before selling, which may or may not be the first bearish chart pattern to come along).

The table suggests that regardless of the busted/non-busted status of the RABFA at the time of buying, you should sell the first non-busted chart pattern which appears. You'll want to avoid trading busted pattern (busted buy and busted: that combination loses money and has a negative expectancy of profit).

The bottom half of the table shows expectancy for the four combinations. Selling non-busted patterns gives the highest expectancy of profit.

Table 10: Selling the First Bearish Pattern (Annualized)
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted pattern23% (44% v 27%)7% (12% v 25%)
Buy busted pattern9% (21% v 9%)-1% (-3% v 8%)
Expectancy (Below)
 Sell Non-Busted PatternSell Busted Pattern
Buy non-busted pattern$2.16$0.34
Buy busted pattern$1.34$-1.07

-- Thomas Bulkowski

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