As of 06/07/2023   Indus: 33,665 +91.74 +0.3%     Trans: 14,406 +345.09 +2.5%     Utils: 918 +15.80 +1.8%     Nasdaq: 13,105 -171.52 -1.3%     S&P 500: 4,268 -16.33 -0.4%	YTD  +1.6%    +7.6%   -5.1%    +25.2%    +11.1%	Targets    Overview: 05/30/2023     33,950 or 32,000 by 06/15/2023   14,600 or 13,350 by 06/15/2023   935 or 880 by 06/15/2023   13,600 or 12,200 by 06/15/2023   4,350 or 4,000 by 06/15/2023
Chart Pattern Indicator: on 6/1/23

As of 06/07/2023   Indus: 33,665 +91.74 +0.3%     Trans: 14,406 +345.09 +2.5%     Utils: 918 +15.80 +1.8%     Nasdaq: 13,105 -171.52 -1.3%     S&P 500: 4,268 -16.33 -0.4%	YTD  +1.6%    +7.6%   -5.1%    +25.2%    +11.1%
Targets    Overview: 05/30/2023     33,950 or 32,000 by 06/15/2023   14,600 or 13,350 by 06/15/2023   935 or 880 by 06/15/2023   13,600 or 12,200 by 06/15/2023   4,350 or 4,000 by 06/15/2023
Chart Pattern Indicator: on 6/1/23

Bulkowski's Ugly Pattern Performance Study

Do perfectly shaped chart patterns perform better or worse than ugly ones? In a test of two chart pattern types, the uglier patterns outperformed the well-shaped ones.

Ugly Pattern Performance: Detailed Results

I looked at double bottoms and double tops to determine whether ugly (uneven) tops or bottoms performed better than those with even peaks or valleys. Here's what I found.

Numbers in parentheses are samples used in the test and the percentages are the average move post breakout. Double bottoms have the most samples. When the valleys are within 0 to 1% in price from each other, the rise averages 31.5%. When the valleys are 4 to 5% apart in price, the rise averages 42.8%. Thus, the uglier the chart pattern, the better the performance.

Ugly Pattern Performance: Definitions

I measured the rise or fall from the breakout price to the ultimate high or low. A breakout occurs when price climbs above the highest high between the double bottoms, or below the lowest low between the double tops. The ultimate high is the highest high before price tumbles at least 20%. The ultimate low is the lowest low before price rises at least 20%. In the test, I used 1,275 stocks covering 7/1991 to 3/2006. Not all stocks covered the entire period and only qualifying double tops and bottoms were used. I found 2,239 double top or bottom patterns, but not all of them had usable data (the ultimate high or low wasn't found yet because price hadn't reversed).

-- Thomas Bulkowski

See Also

• Width. Use the width of peaks or valleys to improve trading results.
• Explore the world of ugly double bottoms.
• The nature of bottoms.
• Busted chart patterns. The answer to profits?
• Double bottoms, overview. Article explains the 4 varieties.

 

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