As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020
As of 12/13/2019
  Indus: 28,135 +3.33 +0.0%  
  Trans: 10,776 -13.65 -0.1%  
  Utils: 857 +7.17 +0.8%  
  Nasdaq: 8,735 +17.56 +0.2%  
  S&P 500: 3,169 +0.23 +0.0%  
YTD
 +20.6%  
 +17.5%  
 +20.2%  
 +31.6%  
 +26.4%  
  Targets    Overview: 12/13/2019  
  Up arrow28,600 or 27,400 by 01/01/2020
  Up arrow11,300 or 10,500 by 01/01/2020
  Up arrow880 or 830 by 01/01/2020
  Up arrow9,000 or 8,400 by 01/01/2020
  Up arrow3,250 or 3,075 by 01/01/2020

Bulkowski's Three Rising Valleys

 

Statistics updated 4/11/2019.

The three rising valleys chart pattern is one you will often see in the stock market and other markets. The reason for this begins with the rules for identification, where almost any three rising valleys qualify for a valid pattern. It is slightly more complicated than that with each succeeding valley resting above the prior one and the three valleys appearing similar. But beyond that, anything goes.

Based on test results discussed in my book, Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns 2nd Edition book. (pictured on the right), the chart pattern is a decent performer in a bull market. It confirms as a valid chart pattern when price closes above the highest peak in the pattern.

Since every trend change from down to up has to post a higher low, this pattern can signal a trend change when three higher lows appear. This type of "inside information" can be invaluable to traders, but just remember that the turn upward may not last long. In a bear market, the rise is just over half what it is in a bull market. And by the time the third bottom appears and the pattern confirms, price may be a long way from the bottom.

Important Results
Identification Guidelines
Trading Tips
Example
See Also

Three Rising Valleys: Important Bull Market Results

Overall performance rank (1 is best): 10 out of 56
Break even failure rate: 10%
Average rise: 48%
Throwback rate: 66%
Percentage meeting price target: 57%

The above numbers are based on 3,061 perfect trades. See the glossary for definitions.

Three rising valleys chart pattern
Three rising valleys

Three Rising Valleys: Identification Guidelines

CharacteristicDiscussion
Weekly or dailyThe pattern appears on either the daily or weekly chart.
Price trendUsually upward leading to the pattern.
ShapeLook for 3 rising valleys -- each valley must be above the prior one.
ProportionalEach valley should look similar. Select all narrow ones or all wide ones, all short, or all tall. Don’t mix them.
VolumeTrends downward 64% of the time.
ConfirmationThe pattern confirms when price closes above the highest peak the pattern.
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Three Rising Valleys: Trading Tips

Trading Tactic Explanation Three rising valleys measure rule
Measure Rule
Measure rule Reference the Measure Rule figure to the right. Compute the height from the highest peak (2) to the lowest valley (1) (between the 3 valleys of the three rising valleys chart pattern) and then multiply it by the above 'percentage meeting price target.' Add the difference to the highest peak (2) in the 3rv to get a price target (3). The link to the left provides more information on the measure rule.
Early entry Reference the lower right figure (Early Entry). If the highest peak (point A) in the three rising valley chart pattern is between the first two valleys (1 and 2), then draw a down-sloping trendline connecting the two highest peaks in the 3rv chart pattern. A close above the trendline signals a buy.
Stop Reference the lower right figure (Early Entry). Place a stop slightly below the last minor low (point 3) in the three rising valleys chart pattern. The link to the left discusses stop placement in depth.
Yearly high Patterns that breakout within a third of the yearly high perform best.
Continuations Patterns that act as continuations perform better than reversals. Three rising valleys alternate confirmation
Early Entry
Breakout volume Below average breakout volume suggests better performance for this chart pattern. For more information, click the link to the left.
Throwback Throwbacks hurt performance. The link to the left defines a throwback. This link discusses performance.
Gain The farther up the price trend the pattern appears, the smaller the potential gain. These two, Study 1 and Yearly low discuss the findings.
 
Top of page More

Three Rising Valleys: Example

Three rising valleys chart pattern example

The above figure shows an example of the three rising valleys chart pattern. Valleys 1, 2, and 3 mark the outline of the chart pattern. Point 4 is the confirmation price, the price at which squiggles on the chart become a three rising valleys chart pattern.

Taking the height from peak 4 (the highest high in the three rising valleys chart pattern) and valley 1 (the lowest low between the three valleys), multiplying it by the 'percentage meeting price target' from Important Bull Market Results table near the top of this page, gives a target of about 45. The stock climbed to the target a few weeks after the breakout. Shown on the log scale.

-- Thomas Bulkowski

Top of page More

See Also

 

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My novels:      New                  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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