|
Trading Tactic |
Explanation |
|
Measure rule |
Refer to the two figures on the right. For downward
breakouts, use the lowest valley in the
pattern as the target. For upward breakouts, compute
the difference between the highest peak (point A) and
lowest valley (B) in the
pattern to get the height. Multiply the height by the above “percentage
meeting price target” and add it to the breakout price (
A) to get the price
target (C). |
|
Intraformation trade |
Since the bottom trendline
slopes upward, do not short this pattern at the top trendline. Go long at the bottom when price bounces off the bottom trendline,
heading up. |
|
Buy at 3rd touch |
When price touches the bottom
trendline for the third time and begins rising, buy. This is for aggressive traders. |
|
Partial rise |
A partial rise works 74% of
the time. See the link on the left for more information. |
|
Partial decline |
A partial decline works 35%
of the time. See the link on the left for more information. |
|
Price trend |
For upward breakouts, the best performing patterns
are those with a short-term (less than three months) move leading to the pattern. Downward breakouts
do better with a long-term move (over six months) leading to the pattern. |
|
Yearly low |
Downward breakouts perform best
when the breakout is within a third of the yearly low. For upward breakouts,
performance is constant. The link on the left provides statistics and this
link gives additional
information. |
|
Throwbacks
and
pullbacks |
Throwback and pullbacks hurt postbreakout performance.
The links on the left define throwbacks and pullbacks. These links for
throwbacks and
pullbacks discuss
performance. |
|
Continuations |
76% break out in the same direction
as that leading to the pattern. |
They pay for the referral on most items and that helps pay for the cost of this site.
