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4366_FM.qxd 4/6/05 12:46 PM Page iii Encyclopedia of Chart Patterns SECOND EDITION Thomas N Bulkowski John Wiley & Sons, Inc 4366_FM.qxd 4/6/05 12:46 PM Page vi 4366_FM.qxd 4/6/05 12:46 PM Page i Encyclopedia of Chart Patterns 4366_FM.qxd 4/6/05 12:46 PM Page ii Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States With offices in North America, Europe, Australia, and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers’ professional and personal knowledge and understanding The Wiley Trading series features books by traders who have survived the market’s ever-changing temperament and have prospered—some by reinventing systems, others by getting back to basics Whether a novice trader, professional, or somewhere in-between, these books will provide the advice and strategies needed to prosper today and well into the future For a list of available titles, visit our Web site at www.WileyFinance.com 4366_FM.qxd 4/6/05 12:46 PM Page iii Encyclopedia of Chart Patterns SECOND EDITION Thomas N Bulkowski John Wiley & Sons, Inc 4366_FM.qxd 4/6/05 12:46 PM Page iv This book is printed on acid-free paper Copyright © 2005 by Thomas N Bulkowski All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and the author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information about our other products and services, please contact our Customer Care Department within the United States 800-762-2974, outside the United States at 317572-3993 or fax 317-572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our Web site at www.wiley.com Library of Congress Cataloging-in-Publication Data: Bulkowski, Thomas N., 1957– Encyclopedia of chart patterns / Thomas N Bulkowski.—2nd ed p cm — (Wiley trading series) Includes index ISBN-13 978-0-471-66826-8 ISBN-10 0-471-66826-5 (cloth) Stocks—Charts, diagrams, etc Commodity futures—Charts, diagrams, etc Investment analysis I Title: Chart patterns II Title III Series HG4638.B85 2005 332.63′222—dc22 2004059094 Printed in the United States of America 10 4366_FM.qxd 4/6/05 12:46 PM Page v To my parents, who continued to love me even after my homemade rocket set the lawn on fire, and to my four-legged best friend, Rusty, who saved my life; it grieves me that I couldn’t save yours 4366_FM.qxd 4/6/05 12:46 PM Page vi 4366_FM.qxd 4/6/05 12:46 PM Page vii Preface to the Second Edition On March 24, 2000, the financial world changed No, that was not the date this book first hit the store shelves, but the beginning of a bear market that lasted ⁄2 years Finally, I had bear market data to use for finding chart patterns! After spending nearly years recovering from the work needed to complete the first edition, I decided to undertake an update I changed the editorial content of the book in small ways, but made substantial improvements in others Here is the list of the important changes: • Bull and bear market statistics for complete coverage • Expanded statistics, all in a similar format: Results Snapshot, at the start of each chapter shows the most important numbers and surprises General statistics, including the average rise or decline, busted pattern performance, and benchmark performance Failure rates, a list of ten breakpoints to show how often a pattern fails Breakout and postbreakout statistics, showing performance over the yearly price range, pullback rates, and performance after a gap Frequency distribution of days to the ultimate high or low, showing when the trend is likely to end Size statistics, describing how performance varies for pattern height, width, and combinations of both Volume statistics, including volume trend, a new concept I call volume shapes, and breakout day volume For best performance, a list of trading tips and where to find them in each chapter vii ch.64(endmatter)_4366.qxd 998 2/23/05 12:29 PM Page 998 Index of Chart and Event Patterns Scallops, Descending and Inverted, page 670 Shark-32 Triangles, Descending, page 730 Triangles, Symmetrical, page 748 Spikes or Tails Triple Bottoms, page 765 TB Downtrend Spike Low Uptrend Spike High TB TB Triple Tops, page 779 TT TT TT Three Falling Peaks, page 684 Wedges, Falling, page 795 Three Rising Valleys, page 698 Triangles, Ascending, page 711 Wedges, Rising, page 811 ch.64(endmatter)_4366.qxd 2/23/05 12:29 PM Page 999 Index of Chart and Event Patterns Weekly Reversals, Downside Wide-Ranging Days Close Near Low Close Near High Weekly Reversals, Upside Bearish Reversal Bullish Reversal 999 ch.64(endmatter)_4366.qxd 2/23/05 12:29 PM Page 1000 ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1001 Index Numbers in bold type refer to chapters; numbers in italics refer to illustrations Adam & Adam double bottoms, 213, 263, 966, 972, 974, 980, 994 double tops, 275, 966, 970, 974, 979, 994 Adam & Eve double bottoms, 229, 263, 265, 966, 971, 974, 979, 994 double tops, 291, 866, 966, 970, 974, 979, 995 top, 278 Announcement day high-low range, 890, 892 Announcements, market impact, 363, 832–833, 881 See also Bad earnings surprise; FDA drug approvals; Good earnings surprise; Same-store sales Area gaps, 362–367, 371 Arithmetic scale, 118 Ascending broadening wedges, see Broadening wedges, ascending Ascending triangle, see Triangle, ascending Average, defined, 985 Average rise or decline, see also Results Snapshot and Statistics section in each chapter defined, 985 performance rank in statistics summary, 965–981 Bad earnings surprise, 833, 855, 969, 973, 977, 981 Bear market, defined, 985 See also Statistics summary, bear market Bounce phase, 274, 499, 617, 623, 829, 831, 836, 840 Bowl, scallop, 257 Bowl shape, 392, 597, 598, 626, 636, 637, 638, 657–658, 672–673 Breakaway gap, 362–369, 371–373, 404, 468, 519, 521, 592 Break-even failure rate, defined, 985 See also Failure rates; Results Snapshot and Statistics section in each chapter Breakout, defined, 983, 985 See also specific types of chart patterns Breakout day gaps, 374, 383, 522, 535, 594, 601, 609, 623, 638, 669, 712, 729, 793, 986 Breakout gap, 983 See also Gap(s) defined, 986 Breakout point, 15 Breakout volume, defined, 986 See also Volume/volume trends heavy/light performance, 984 Broadening bottoms, 11, 13, 15, 16, 21, 64, 66, 965, 971–973, 979–980, 993 Broadening formations right-angled and ascending, 28, 668, 767, 965, 971–973, 978, 980, 993 1001 ch.65_IND_4366.qxd 1002 2/23/05 12:29 PM Page 1002 Index Broadening formations (cont.) right-angled and descending, 45, 64, 965, 970, 972, 974, 978–979, 993 Broadening patterns, defined, 985 Broadening tops characterized, 12, 14, 46, 63, 387, 434–435, 767, 870, 965–966, 971–972, 974, 978, 980, 993 orthodox, 64, 68, 69 right-angled, 162–163, 782 right-angled ascending, 161, 781–782 Broadening wedges ascending, 81, 426, 427, 428, 966, 970–971, 974, 979–980, 993 descending, 98, 388, 494, 781, 785, 966, 970, 972, 974, 978, 980, 993 Broker, stock ratings by, see Stock downgrades; Stock upgrades Bull market, defined, 986 See also Statistics summary, bull market Bump-and-run reversal bottoms, 115, 966, 971, 974, 979, 985, 993 defined, 988 dual, 123–124, 136, 137, 140, 141, 142 implications of, generally, 150 multiple, 123, 142 tops, 132, 494, 966, 970, 974, 977, 985, 993 Bump height, 120, 136–137 Bump phase, 118–119, 130, 134, 135, 138, 243, 514, 885 Busted patterns, see also Results Snapshot and Statistics and Trading Tactics sections in each chapter best performance guidelines, 27, 43, 697, 747, 764, 793, 949 defined, 982, 986 Buy-and-hold strategy, 7, 156, 328, 381, 396, 443, 585, 784, 964 Buy signals, 877, 904–905, 917–918, 931–932, 942, 944, 945, 953, 961 Buy-the-dip investors, 84, 407 Candlesticks, Fibonacci, and Chart Pattern Trading Tools (Fischer/Fischer), 684, 698 Capital gains taxes, 851 Change after trend ends, see also Results Snapshot and Statistics and Trading Tactics sections in each chapter best performance guidelines, 28–29, 45–46, 63–64 defined, 982, 986 implications of, 81–82, 98–99, 132, 149, 164, 179–180, 196–197, 213, 229, 244, 259, 336, 438, 451 performance rank in statistics summary, 965–981 Channel, 498, 500, 511, 514, 762–763 Closing price reversal, 994 Closing the gap, 211, 363, 830, 835–836, 898 Coils, 748 Commodities, 799–800 Commodity channel index (CCI), 709–710, 842, 906 Common gaps, 364–365 Comparable store sales, 908, 921 Complex head-and-shoulders formations bottom, 390, 409, 467 characterized, 461, 612, 967, 969, 972, 975, 979, 985, 995 tops, 421, 609 Confirmation level, defined, 987 Confirmation line, 214, 215, 218, 226, 235, 250, 253, 283, 287–289, 296–297, 303, 308, 319, 324, 326, 685, 688, 701, 710, 769, 777, 780–781, 866 Confirmation point, characterized, 65, 326 See also Statistics and Trading Tactics sections in each chapter Confirmation price, 233–234, 247–248, 262–263, 268, 279–280, 293, 295–297, 311, 313, 317, 325–326, 552–553, 672–673, 686–687, 701–702, 776–777, 895, 897–898, 920 defined, 987 Congestion, 20, 200, 217, 231, 311, 363, 440, 453, 549, 565, 582, 588, 740, 782, 786 Consensus estimate, 947 ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1003 Index Consolidation(s), 85, 102, 128, 219, 350, 351, 353, 364, 365, 378, 393, 394, 410, 453, 468, 499, 540, 551, 553–554, 568, 580, 592, 593, 595, 700, 732, 777, 816, 893, 918, 948 defined, 987 Continuation(s), see also Results Snapshot and Statistics and Trading Tactics sections in each chapter best performance guidelines, 607, 669, 826, 879, 907, 920, 933 characterized, 45–46, 115, 149, 180, 196, 335–336, 350, 362–363 defined, 982, 987 Continuation gap, 362–363, 369–371, 373 Corrective phase, 96, 214, 231, 247, 496–499, 501–510, 512–518, 520–521, 592–593, 702, 785, 809 defined, 987 Countertrend, generally breakouts, 35 pattern, defined, 987 trades, 615, 622, 720, 957 Cup handle, 150, 151–152, 159, 162, 167 Cup with handle formation characterized, 115–116, 117, 149, 226, 227, 966, 972, 974, 980, 985, 994 defined, 985 inverted, 164, 966, 970, 974, 977, 985, 994 Curving volume trend, 597–598, 611 Daily charts, 537–538, 641, 672 Daily scale, 597, 611 Daily trading range, 113 Day trading, 606–607 Dead-cat bounce characterized, 16, 274, 372, 434, 436, 492, 605, 752, 829, 954, 969, 973, 977, 981, 994 defined, 827 inverted, 844, 969, 973, 977, 981, 994 Decline phase, 831–832, 834–837 Descending broadening wedges, see Broadening wedges, descending 1003 Diamond bottoms, 179, 197, 211, 966, 969, 971, 974, 977, 979, 985, 994 tops, 193, 196, 266, 966, 970, 972, 974, 978, 979, 985, 994 Dome-shaped volume, see also Statistics section in each chapter best performance guidelines, 44, 62, 228, 258, 389, 420, 638, 669, 778, 794 characterized, 46, 50, 183, 210, 213, 309, 323, 468, 598, 613, 625, 627, 642, 643, 654, 657, 685, 814 defined, 991 performance statistics summary, 984 Double bottoms Adam & Adam, 213, 263, 966, 972, 974, 980, 994 Adam & Eve, 229, 263, 265, 966, 971, 974, 979, 994 characterized, 213, 439, 606, 791, 793, 918, 919, 987 defined, 985 Eve & Adam, 244, 263, 265, 966, 972, 974, 980, 994 Eve & Eve, 216, 259, 966, 971, 974, 980, 994 Double tops Adam & Adam, 275, 966, 970, 974, 979, 994 Adam & Eve, 291, 866, 966, 970, 974, 979, 995 characterized, 65, 96, 116, 136, 145, 147, 168, 292, 295, 298, 303, 441, 453, 559, 754, 830, 866, 946 defined, 985 failures, 280 Eve & Adam, 307, 966, 970, 975, 978, 995 Eve & Eve, 321, 966, 969, 975, 978, 995 Dow Jones industrials, Downgraded stock, see Stock downgrades Downhill run, 134, 135–136 Dual bump, 123–124, 136, 137, 140, 141, 142, 987 Dual head, 392, 402, 422 ch.65_IND_4366.qxd 1004 2/23/05 12:29 PM Page 1004 Index Dual shoulder(s) characterized, 467 complex head-and-shoulders formation, 391 Dual spike, 546 Duplicate heads, 467 Earnings estimates, 896, 939, 948 Earnings surprise(s) bad, 833, 855, 969, 973, 977, 981 defined, 827 good, 868, 969, 977, 981 End (pattern end), defined, 987 Entry point, 697, 708, 778, 920, 960 See also Buy signals Eve & Adam double bottoms, 244, 263, 265, 966, 972, 974, 980, 994 double tops, 307, 966, 970, 975, 978, 995 top, 278 Eve & Eve double bottoms, 259, 919, 966, 971, 974, 980, 994 double tops, 321, 966, 969, 975, 978, 995 Event decline, 829 Ex-dividend gap, 363, 365–366 Exhaustion gap, 362–364, 366, 370–372, 467, 592 Existing store sales, 908, 921 Exit point, 920, 948 See also Sell signals Expanding triangle, 64 Expectations, 909 Failure rates, 983 See also Break-even failure rate; Statistics section in each chapter best performance guidelines, 27, 43, 62, 80, 97, 113, 131, 148, 163, 195, 211, 227, 243, 257, 274, 289, 320, 349, 361, 404, 420, 450, 462, 479, 494, 535, 562, 578, 594, 607, 638, 653, 669, 682, 697, 710, 729, 747, 778, 810, 826, 866, 879, 920, 964 defined, 964, 983, 987, 990, 993 implications of 120, 297, 441 performance rank in statistics summary, 965–981 Falling peaks, 872 Falling wedge, see Wedge, falling False breakout, 86 FDA drug approvals, 827, 831, 880, 946, 969, 977, 981 Federal Reserve, 785, 800 Fibonacci retracement, 169, 176, 845 Financial news, information resources, 923, 936, 951, 954 First leg measured move down, 496–498, 501–510 measured move up, 511–519, 521 5% failure, 52–53, 87–88, 103–104, 106, 137, 155, 185, 235, 250, 251, 255, 281, 303, 317, 332, 380, 454, 540–541, 553, 584, 626, 719, 754, 755, 769–770, 784, 799, 815, 816 Five-point reversal, 12–13, 63–64, 68, 69 Flag(s) characterized, 79, 150, 151, 335, 884, 966–967, 970, 972, 975, 978, 980, 985, 991, 995 defined, 985 high and tight, 350, 971, 975, 979, 985, 995 Flag, earnings, 827, 871, 893, 969, 973, 977, 981, 995 Flagpole, 895–896, 901 Flat base, 170, 353, 433, 499, 580, 987 Flat bottom formations, 576 Flat shelf, 266, 272 Flat top formations, 592–593 Food and Drug Administration (FDA) approvals, see FDA drug approvals Formation end to breakout, 20, 983, 987 Formation length, average, 984 See also Statistics section in each chapter Frequency distribution, see also Statistics section in each chapter best performance guidelines, 949 defined, 964, 983, 987 event decline, 835, 838–839 Fundamental analysis, 3, 5, 668, 932 Fundamentals, significance of, x, 266, 274, 349, 371, 567, 614, 637, 660, 662–663, 785, 824, 842, 910, 918, 948 ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1005 Index Gap(s), see also Statistics section in each chapter area, 362–367, 371, 896, 898 alignment, 481 best performance guidelines, 44, 62, 97, 114, 148, 178, 195, 212, 535, 594, 623, 638, 669, 682, 710, 729, 793, 810, 826, 843, 964 breakaway, 309, 362–369, 371–373, 468, 519, 521, 592 breakout day, 28, 45, 63, 98, 99, 179, 196, 197, 374, 404, 522, 535, 594, 609, 623, 638, 669, 712, 729, 793 characterized, 274, 308, 362, 390, 404, 464–467, 589, 624, 625, 654, 655, 831, 832, 845, 904, 910–913, 922–923, 925–927, 932, 938, 944–945, 947–948, 963, 995 common, 364 continuation, 309, 362–363, 365–366, 369–371, 373 defined, 987 ex-dividend, 363, 365–366 exhaustion, 309, 362–364, 366, 370–372, 467, 592 islands, long, 489–490 measuring, 365 pattern, 364–365 performance, defined, 987 performance statistics summary, 967, 971, 975, 980, 983 remaining, 363 runaway, 365 size of, 368, 983 unaligned, 484 Good earnings surprise, 868, 894, 969, 977, 981 Half-staff flag formation, 336, 338–339, 521, 525–527, 737, 761, 919 Handle, see also Cup handle; Cup with handle formation characterized, 152, 597–598, 602, 604–605, 636 performance, defined, 988 retrace, defined, 988 Head-and-shoulder formations bottoms, 184, 185, 257, 374, 409, 669, 717, 767–768, 808–809, 852, 853, 967, 971–972, 975, 979, 985, 995 1005 characterized, 136, 175–176, 279, 292, 306, 853–854, 872, 885 complex, 377, 409, 967, 969, 972, 975, 978–979, 985, 995 complex bottoms, 390 complex tops, 421 consolidation, 410 symmetry in, 377–378 tops, x, 175–176, 199, 377, 405, 411–412, 501, 441, 753, 780, 781, 859, 886, 967, 969, 975, 978, 985, 995 tops, unsymmetrical, 879 Height of pattern, see also Statistics section in each chapter defined, 964 lead-in, 120, 135–137, 144–146, 988 Herd instinct, 613 High and tight flags, 350, 971, 975, 979, 985, 995 High/low trend, 528–530 Holding period, 300 Horn bottoms, 438, 537, 967, 972, 975, 979, 985, 996 implications of, 263 tops, 422, 451, 537, 967, 970, 975, 978, 985, 996 How to Make Money in Stocks (O’Neil), 150, 352 Icup, see Cup with handle formation, inverted Industry trends, 225–226, 241–242, 255–257, 272–273, 287–288, 303–304, 317, 332, 719, 784, 840, 877 Inner cup, 160–162 Inner head-and-shoulder bottoms, 401–403 Inner head-and-shoulders formations, 425, 426 Inside days, 996 Insider buying, 567 Insider selling, 926, 946 Insider trading, 676 Inside week, 450, 546, 549, 558–559 Interest rates, 785, 800 Intermediate-term trend, 991 ch.65_IND_4366.qxd 1006 2/23/05 12:29 PM Page 1006 Index Intraday charts, 641 Intraformation trading, 41–42, 61, 72–74, 111, 577 Intrapattern trade, 761–762 Intrinsic value, 610 Inverted dead-cat bounce, 844 Investment style, 5–7, 622 Island reversals bottom, 466–467, 469–470, 477, 996 characterized, 464, 482, 484, 967, 971–972, 975, 978, 980, 985 top, 466–467, 469–470, 477, 996 Islands long, 480, 967, 970, 972, 975, 978–979, 985, 996 short, 491–492 J-shape formations implications of, 626–628, 631, 640–642, 657, 886, 890–891 inverted, 883–884, 892 Key reversal, 996 Last leg, 496, 510 Lead-in phase characterized, 118, 119, 127, 134, 135–136, 515 height, 118–120, 135–137, 144–146, 988 Left shoulder, 199, 377–380, 385, 389, 391–392, 400–401, 405–406, 409–410, 414–416, 419–420, 424, 426, 433, 461, 781 Limit orders, 194, 709–710, 809, 851, 877 Linear regression, 100, 200, 280, 423, 762, 988 Logarithm scale, 167 Long-term investors, Long-term trend, 991 Market orders, 778, 851 Market rallies, 103, 263, 846 Market trends, trading with, 27, 40, 44, 53, 80, 89, 96, 156, 195, 255, 272–273, 287, 304, 317, 349, 569, 586, 661, 666–667, 692, 729, 762, 809, 877, 471–472 See also Trends, trading with Measured move cascading, 499 down, 175–176, 496, 497, 498, 499–501, 504–507, 967, 969, 975, 977, 986–987, 996 up, 214, 231, 295, 510, 512, 514–519, 967, 971, 975, 979, 986–987, 996 Measure rule, see also Target price, calculation of; Trading Tactics section in each chapter characterized, 39 defined, 988 Measuring gap, 365 Median, defined, 39, 988 Median height, defined, 984 See also Statistics section in each chapter Median length, defined, 984 See also Statistics section in each chapter Megaphone, 11, 14, 32, 63, 85–86, 101 Minor highs, see also Statistics section in each chapter best performance guidelines, 26, 113 defined, 989, 991 implications of, 181, 502, 511, 534, 581, 718, 735, 754, 962 Minor lows, see also Statistics section in each chapter best performance guidelines, 13, 243 defined, 988–989, 991 implications of, 47, 181, 264, 392, 502, 511, 581, 718, 754, 962 Momentum, 20, 29, 31, 66, 133–134, 136, 147, 181, 243, 351, 376, 398, 404, 407, 489–490, 515, 543, 587, 591, 602, 610, 613, 663, 681, 737, 750, 799, 862, 916, 925, 958 Momentum traders/trading, 65, 66, 84, 103, 144, 295, 705 Money management, 5, 948 Moving averages, 372, 453, 842, 877 Multiple bumps, 123, 142 Multiple heads, 391, 394, 421 Multiple shoulders, 391, 393–394, 409, 421, 423, 424–425 Multiple tops, 793 Narrow patterns, see also Statistics section in each chapter ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1007 Index best performance guidelines, 62, 97, 114, 131, 178, 258, 274, 290, 320, 334, 361, 389, 404, 420, 495, 623, 653, 697, 747, 764, 794, 907 characterized, 11, 99, 164, 197, 238, 244, 307, 321 defined, 984, 989 Neckline, 184, 257, 306, 377–379, 382, 385–387, 390–395, 400–405, 406, 407–408, 410–411, 413, 416–418, 420, 423, 425–426, 429, 432–435, 437, 442, 695, 717, 809, 989 Number of formations, defined, 17, 982 See also specific types of chart patterns One-day reversals, 66, 147, 467 O’Neil, William J., 150–152, 352 Orthodox broadening top, 63–64, 68, 69 Outside days, 997 Outside week, 451, 546, 558–559 Overshoot, 13, 989 Panic selling, 334 Partial decline best performance guidelines, 44, 113, 578, 594 defined, 989 failure, defined, 989 implications of, 13, 20–21, 24, 37–39, 41–42, 44, 50, 57–58, 63, 72, 74, 77–78, 101, 102, 107–109, 111, 113, 563, 574–575, 578–579, 590–591, 594 internal, defined, 988 intraformation, 21–22, 37, 57–58, 107, 109 Partial rise best performance guidelines, 27, 44, 62, 97, 578, 594 defined, 990 failure, defined, 990 implications of, 20–21, 24–25, 27, 37–39, 41–42, 44, 49–50, 57–59, 61–62, 72, 74, 84–87, 90–92, 94–95, 97, 107–109, 574–575, 578–579, 580, 590–591, 594 internal, defined, 988 intraformation, 21–22, 37, 90, 107, 109 1007 Pattern gaps, 364–365 Pennants, 117, 341, 522, 660, 737, 761, 815, 846, 877–878, 884, 893, 895, 967, 970, 972, 975, 977, 980, 986, 991, 997 Percentage basis, 521 Percentage meeting price target, defined, 990 See also Target price; Results Snapshot in each chapter Perfect trades, 8, 982 Performance rank, defined, 990 See also Results Snapshot in each chapter Pipe formations bottoms, 536, 967, 971, 975, 979, 986, 997 tops, 550, 967, 970, 975, 977, 986, 997 Plunge phase, 831 Point and figure chart, 845 Position traders, 7, 493, 990 Postbounce decline, 829 Pre-formation rise/drop, 591, 594 Premature breakout, 32–33, 50, 85, 87, 193, 712, 713, 715, 749, 753, 816, 962, 990 Price decline, 129, 324–325, 988 Price rise, maximum, defined, 983, 988 Price trend, see Identification Guidelines in each chapter Profit margin, 542 Progressive stops, 42, 617, 623 Pullbacks, see also Results Snapshot and Statistics section in each chapter best performance guidelines, 44, 97, 113, 148, 178, 195, 211, 290, 306, 319–320, 334, 349, 420, 436–437, 462, 479, 494, 509, 535, 562, 578, 594, 623, 669, 682, 697, 729, 747, 764, 793, 810, 826, 866, 920, 949, 964 characterized, 30, 46–47, 180–181, 197, 336, 422, 780, 878, 911, 963 defined, 983, 990 performance rank in statistics summary, 965–981 Qualifying, defined, 990 ch.65_IND_4366.qxd 1008 2/23/05 12:29 PM Page 1008 Index Random-shaped volume, 984, 991 See also Statistics section in each chapter R/C performance, defined, 990 See also Continuation(s); Reversals Rebounds, 111, 176, 183, 282, 290, 520, 543, 567 Rectangle bottoms, 563, 588, 967, 970, 972, 975, 978, 980, 986, 997 countertrend, 570, 587 horizontal, 337 short, 336 symmetrical, 338 tops, 579, 967, 970, 972, 975, 979–980, 986, 997 Reference day, 846–848, 851, 853 Relative strength, 151 Relative strength index (RSI), 709–710, 842, 906 Remaining gap, 363 Resistance level/zone, see also Statistics section in each chapter best performance guidelines, 27, 44, 96–97, 211, 227, 274, 349, 361, 450, 479, 535, 549, 682, 778, 793, 907, 933 characterized, xi, 29, 31, 33, 47, 49, 50, 51, 209, 164, 423, 507, 508, 519, 520, 565, 598, 632, 650, 651, 656, 659, 668, 680, 713, 732, 898, 947–948 Retest of the low, 448, 461, 493, 541, 669, 732, 846 Retracement, 48, 67, 103, 167, 174, 336, 467, 496–497, 502, 504–505, 510, 512, 514, 516, 518, 538, 547, 549, 552, 621, 641, 652, 657, 845 Reversals, see also Results Snapshot and Statistics section in each chapter best performance guidelines, 131, 195, 669, 920, 933 characterized, 11, 46, 64, 81, 84, 100, 325, 455–456, 576, 593, 592, 783, 864, 871 defined, 982, 990 five-point, 63–64, 69 island, see Island reversals one-day, 26, 47, 66, 242, 467, 548, 964 one-day, bottoms, 996 one-day, tops, 996 open-close, 997 pivot point, 997 weekly, 999 upside, 999 Right-angled and descending broadening chart, see Broadening formations, right-angled and descending Right shoulder, 199, 377–380, 382, 385–386, 392, 397, 400–402, 404, 406, 408–410, 414–417, 419, 423–424, 426, 429, 432–433, 442, 461, 467, 781, 854 Rising wedge, see Wedge, rising Risk management, 195, 211, 897, 925 See also Stop-loss orders Risk/reward ratio, 78, 209–210, 300, 347–348, 803 Rounded bump, 135–136, 141 Rounding bottoms, 116–117, 595, 967, 971, 975, 979, 986, 997 Rounding tops, 608, 967, 970, 972, 975–976, 978, 980, 986, 997 Rounding turns, 595, 609, 623 See also Rounding bottoms Rumors, market impact of, 84–85, 881, 925, 938, 954 Runaway gaps, 365 Same-store sales bad, 908, 969, 973, 977, 981 defined, 827 good, 921, 969, 973, 977, 981 Saucers, 151, 595–596, 598, 600, 604–607, 655 Saw-tooth formations, 499, 513 Scallops ascending, 256, 257, 624, 656, 913, 967–968, 971–972, 976, 979–980, 986, 997 ascending and inverted, 639 characterized, 499 descending, 654, 791, 968, 970, 972, 976, 978, 980, 986, 997–998 descending and inverted, 670 inverted, 609, 611, 968, 970–971, 976, 978, 980, 986, 997–998 ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1009 Index Second leg measured move down, 497, 498, 499–501, 504–507, 509 measured move up, 512, 514–519, 521 Selling pressure, 31, 48, 84, 133–134, 182, 260–261, 597, 610, 613, 714, 750, 937 Sell line, 144–146, 148, 243 Sell signals, 33, 494, 533–535, 652, 726–727, 846, 863–865, 878, 883, 904–905, 917–918, 932, 943–945, 952, 961, 963 Shape, see specific types of chart patterns Shark-32, 998 Short patterns, see also Statistics section in each chapter best performance guidelines, 44, 114, 131, 163, 195, 212, 227, 290, 306, 361, 389, 404, 420, 463, 653, 794, 810, 879, 933, 949 defined, 984, 990–991 Short sales, recommendations for, 24–25, 33, 36, 52, 89, 95, 105, 111, 156, 175–176, 221, 251, 283, 295–296, 300, 303, 305, 318, 327–328, 332, 408, 412, 417, 419–420, 433, 435, 438, 455–456, 484, 507, 509, 526, 528, 557, 561–562, 567, 592, 620–621, 668, 680–681, 703, 726–727, 770, 785, 794, 804, 824, 840, 842, 864, 869, 881, 883, 886, 891, 899, 915, 917–918, 922, 925, 927–928, 932–933, 942, 944–948, 953, 960, 963–964 Short stop, 24–25 Short-term traders, 744, 824 Short-term trend, 991 Simple ABC correction, 496 Size, see also Height of pattern; Width of pattern significance of, 39 statistics, 22 See also specific sizes Soft market, implications of, 475 Spike(s) double price, 440 downward, one-day, 263, 264 illustration of, 998 1009 one-day, 47, 218, 230, 263, 292, 304, 310 short, 231–232 size of, 446 twin, 214 two-day, 292 Stair-step pattern, 422, 640, 686, 696, 952 Standard & Poor’s 500, changes in, see also Statistics section in each chapter best performance guidelines, 494, 906 characterized, defined, 982, 990 Start (pattern start), defined, 990 Statistics summary bear market, 973–981 bull market, 965–973 Stochastics, 842 Stock downgrades, 827, 833, 870, 933, 969, 973, 977, 981 Stock upgrades, 827, 950, 969, 973, 977, 981 Stop-loss orders, recommendations for, xi, 24–26, 42–43, 52–53, 59, 61, 77–78, 95, 111–113, 127, 130, 147, 160, 162, 164, 169, 177, 194–195, 202, 211, 280, 289, 319, 355, 357, 359–360, 371, 386–387, 401–403, 412, 419, 435, 448, 472, 493, 518, 547, 561, 585, 607, 615, 630, 636–637, 666–667, 689, 770, 775, 777, 780, 791–793, 824, 861, 864, 899, 900, 906, 914, 918, 928, 932, 945, 961 Supply and demand, 102, 133, 581–582, 713–714 Support level/zone, see also Statistics section in each chapter best performance guidelines, 27, 44, 148, 178, 211, 320, 334, 349, 420, 479, 509, 535, 651–652, 578, 729, 866, 949 characterized, xi, 29, 31, 33, 47, 48, 49, 50, 51, 147, 209, 502, 507, 508, 519, 520, 565, 567, 650, 651, 656, 668, 680, 713, 732, 963 Support and resistance, 198, 200, 206, 209 ch.65_IND_4366.qxd 1010 2/23/05 12:29 PM Page 1010 Index Swing measurement, 510 See also Measured move, down Swing traders, 288, 345, 518, 583, 750, 851, 895, 916, 990 Symmetrical triangle, see Triangle, symmetrical Symmetry complex head-and-shoulder tops, 393–394, 409, 424–426 head-and-shoulders top, 408 Tails, 998 Tall patterns, see also Results Snapshot and Statistics section in each chapter best performance guidelines, 27, 44, 62, 80, 97, 114, 131, 163, 178, 195, 212, 227, 243, 290, 306, 320, 334, 349, 361, 389, 404, 420, 437, 450, 479, 495, 535, 562, 578, 594, 607, 623, 638, 653, 669, 683, 710, 747, 764, 810, 826, 867, 907, 920, 933, 949, 964 defined, 984, 990–991 Target price, calculation of, see Trading Tactics (measure rule) section in each chapter Technical analysis, x, 3, 5–7, 408, 614, 872, 932, 948 Technical Analysis of Stocks and Commodities, x Technical indicators, 317, 349, 708, 910 Term, short/intermediate/long, defined, 991 Terminology, 985–992 Terrorist attack (9/11/01), market impact, 484, 799 Three-bar patterns, 446 Three falling peaks, 684, 872, 968, 970, 976, 978, 986, 998 Three rising valleys, 698, 968, 971, 976, 980, 986, 998 Throwbacks, see also Results Snapshot and Statistics section in each chapter best performance guidelines, 44, 97, 113, 131, 195, 211, 227, 243, 258, 274, 349, 361, 389, 404, 450, 479, 594, 607, 623, 653, 669, 710, 729, 747, 810, 879, 892, 907, 933 characterized, 47, 51, 184–186, 216, 869 defined, 983, 991 performance rank in statistics summary, 965–981 Touches, see specific types of chart patterns Trading Classic Chart Patterns (Bulkowski), 215, 644, 853 Trading costs, 900, 941 Trading style, xi, 371–372 Trend change indicators, 46, 83, 171, 332–334, 461, 477–478, 481, 502–503, 551, 625–626, 675, 709, 734, 842 1–2-3 rule, 844, 846 Trend channel, see Channel Trend high, defined, 991 Trend lines, 66–67, 470, 477, 652, 695–696, 707, 709, 797–798, 842 See also specific types of chart patterns Trend low, defined, 991 Trend reversal, 100 See also Reversals Trends, trading with, 925, 933, 957 Trend start, defined, 991 Triangle apex, 297, 717, 723, 734, 741, 751, 759, 761, 763–764, 910 ascending, 29, 103, 116, 305, 711, 813, 968, 970, 972, 976, 978, 980, 998 defined, 986 descending, 103, 125, 442, 565, 730, 968, 970–971, 976, 978–979, 998 expanding, 63 symmetrical, 181–182, 194–195, 338, 484, 519, 521, 524, 526, 554, 644, 708, 709, 748, 910, 919, 922, 968, 970, 972, 976, 979–980, 998 symmetrical bottoms, 998 symmetrical tops, 998 Triple bottoms, 217, 249, 377, 765, 968, 971, 976, 980, 986, 998 Triple tops, 116, 136, 559, 754, 779, 919, 968, 970, 976, 978, 986, 998 Twin peak formation, 65, 279–280, 289, 293, 304, 323, 324, 325, 452–453, 552, 830 See also Double tops Twin spikes, 214 ch.65_IND_4366.qxd 2/23/05 12:29 PM Page 1011 Index Ultimate high, days to characterized, 90, 121–123, 156–158, 163, 220–221, 236, 238, 252–253, 266–268, 355, 357, 361, 381, 383, 396–399, 404, 443, 445, 542–544, 549, 600–602, 624, 638–639, 646–648, 653, 703–705, 771, 773, 873–875, 899–902, 927–928 defined, 982, 987, 991 frequency distributions, see Frequency distributions Ultimate high/low, days to, 35, 37–39, 54, 70, 72, 74, 88–89, 104, 106, 108, 187, 190, 203–204, 341, 344, 472, 474, 479, 486–487, 489, 569, 572, 585–586, 588, 614–615, 617–618, 630–631, 660–664, 719–721, 723, 738–739, 741, 756–757, 801–802, 804, 817–818, 820, 887–889, 940–941, 943, 956–959 Ultimate low, days to characterized, 54, 80, 82, 90, 138–139, 144, 171, 178, 282–283, 298–299, 301, 312–315, 319, 321, 327–329, 334, 411–412, 414, 428–431, 456, 458, 555–557, 579, 675–677, 683, 690–692, 729, 785–786, 788, 860–862, 913–916 defined, 982, 987, 991 frequency distributions, see Frequency distributions Undershoot, 13, 991 Upgraded stock, see Stock upgrades Uphill run, 118–119, 309, 641, 737 U-shaped volume, see also Statistics section in each chapter best performance guidelines, 62, 80, 114, 163, 306, 319, 361, 389, 404, 420, 509, 535, 607, 623, 638, 683, 697, 710, 778, 794 defined, 984, 991 characterized, 45, 50, 64, 67, 69, 99, 183, 214, 323, 340, 374–375, 468, 476, 483, 484, 496, 497, 595, 609, 612, 626, 670, 685, 699, 731, 814 Valleys, see Three rising valleys Value investors, 84, 750 1011 Visibility, significance of, 440, 442 Volatility, impact of, 169, 306 Volume/volume trends, see also Results Snapshot and Statistics section in each chapter best performance guidelines, 27, 62, 80, 114, 195, 243, 258, 319, 349, 389, 404, 420, 549, 565, 607, 623, 683, 710, 719, 729, 794, 879 characterized, 31, 100, 137, 305, 322, 376, 395, 452, 565, 581, 610, 699, 713, 718, 728, 732, 736, 856, 894 defined, 984–988, 991 falling, 984, 991 heavy left/right performance, defined, 988 performance, by shape, 984 rising, 984, 991 shape, defined, 27, 991 See also Dome-shaped volume; Randomshaped volume; U-shaped volume statistics, 23, 40 Warning line, 144–146 Warning signals, 52–53, 424, 442 Weakness, indicators of, 40, 44, 131, 227, 258, 407, 416, 472, 495, 544, 549, 560, 902 Wedge apex, 796–797, 804, 815, 820 ascending, 811 ascending broadening, see Broadening wedges, ascending countertrend, 817, 820 defined, 986 descending broadening, see Broadening wedges, descending falling, 117, 513, 525, 795, 812–813, 968, 971–972, 976, 978, 980, 985, 998 rising, 524, 525, 622, 811, 968, 971–972, 976, 979, 980, 985, 999 symmetrical, 338, 524 Weekly charts, 440, 448–450, 537–539, 552, 755, 768–769, 781, 783 Weekly scale, 183, 597–598, 611 ch.65_IND_4366.qxd 1012 2/23/05 12:29 PM Page 1012 Index Wide patterns, see also Statistics section in each chapter best performance guidelines, 44, 114, 131, 179, 212, 227, 290, 349, 361, 389, 404, 420, 479, 578, 594, 607, 653, 669, 683, 794, 810, 826 defined, 984, 992 Wide-ranging days, 999 Width of pattern, see Statistics section in each chapter Yearly position, see also Statistics section in each chapter best performance guidelines, 44, 62, 80, 131, 148, 163, 195, 243, 290, 349, 361, 389, 420, 494, 549, 562, 578, 594, 623, 638, 653, 669, 697, 710, 729, 764, 907 defined, 992 performance, defined, 992 ... xv Contents Introduction PART ONE Chart Patterns Broadening Bottoms 11 Broadening Formations, Right-Angled and Ascending 28 Broadening Formations, Right-Angled and Descending 45 Broadening Tops... Preface to the Second Edition • More chart patterns I added 14 new chart patterns • Event patterns I added new types of patterns, which I call event patterns These include earnings surprises, drug... Library of Congress Cataloging-in-Publication Data: Bulkowski, Thomas N. , 1957– Encyclopedia of chart patterns / Thomas N Bulkowski. —2nd ed p cm — (Wiley trading series) Includes index ISBN-13 978-0-471-66826-8