Summary
By taking the average of the averages, which is
unscientific (but it does give a hint), we find that chart patterns acting as
reversals outperform those continuing to trend in both bull
and bear markets.
The following covers the top ten performers in bull markets only.
Reversals, Upward Breakouts
|
Chart pattern |
Average Rise |
|
Flags,
High and Tight, up breakout |
69% |
|
Triangles,
Descending, up breakout |
58% |
|
Scallops,
Ascending and Inverted, up breakout |
47% |
|
Broadening
Wedges, Ascending, up breakout |
46% |
|
Rectangles
Bottoms, up breakout |
46% |
|
Three
Rising Valleys, up breakout |
46% |
|
Pipe
Bottom, up breakout |
45% |
|
Bump-and-Run
Reversal Bottoms, up breakout |
40% |
|
Double
Bottoms, Eve & Eve, up breakout |
40% |
|
Head-and-Shoulders
Bottoms, up breakout |
38% |
Continuations, Upward Breakouts
|
Chart Pattern |
Average Rise |
|
Diamond
Bottoms, up breakout |
58%* |
|
Rounding
Bottoms, up breakout |
47% |
|
Triangles,
Descending, up breakout |
43% |
|
Scallops,
Ascending and Inverted, up breakout |
41% |
|
Rectangles
Tops, up breakout |
39% |
|
Rounding
Tops, up breakout |
38% |
|
Triple
Bottoms, up breakout |
38% |
|
Broadening
Wedges, Descending, up breakout |
38% |
|
Broadening
Wedges, Ascending, up breakout |
36% |
|
Bump-and-Run
Reversal Bottoms, up breakout |
36% |
* Based on fewer than 30 samples
Reversals, Downward Breakouts
|
Chart Pattern |
Average Decline |
|
Head-and-Shoulders
Tops, Complex, down breakout |
23%* |
|
Islands,
Long, down breakout |
23% |
|
Broadening
Wedges, Descending, down breakout |
22% |
|
Head-and-Shoulders
Tops, down breakout |
22% |
|
Diamond
Tops, down breakout |
22% |
|
Horn
Tops, down breakout |
21% |
|
Bump-and-run
Reversal Tops, down breakout |
21% |
|
Pipe
Tops, down breakout |
20% |
|
Rounding
Tops, down breakout |
20% |
|
Diamond
Bottoms, down breakout |
19% |
* Based on fewer than 30 samples
Continuations, Downward Breakouts
|
Chart Pattern |
Average Decline |
|
Islands,
Long, down breakout |
22% |
|
Diamond
Bottoms, down breakout |
21% |
|
Broadening
Formations, Right-Angled and Descending, down breakout |
20% |
|
Broadening
Formations, Right-Angled and Ascending, down breakout |
20% |
|
Rounding
Tops, down breakout |
20% |
|
Broadening
Wedges, Descending, down breakout |
19% |
|
Triangles,
Ascending, down breakout |
19% |
|
Diamond
Tops, down breakout |
19%* |
|
Triple
Tops, down breakout |
19% |
|
Pennants,
down breakout |
19% |
* Based on fewer than 30 samples
Notes:
The average rise and decline
is for hundreds of ‘perfect trades’ without commissions or fees
deducted.
Each reversal or continuation
measures from the breakout to the ultimate high (upward breakout) or low price (
downward breakout). The ultimate high is the
highest high before price drops by at least 20%. The ultimate low is the lowest low
before price rises by at least 20%. Other
restrictions apply, but you get the idea.
|
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