Busted Performance

The third edition of this book Encyclopedia of Chart Patterns

has a table in most chapters discussing busted pattern performance.

This article compares the performance of busted patterns with themselves and their non-busted counterparts. If you don't understand what a busted pattern in, consult the glossary.

How Often Do Chart Patterns Bust?

Table 1: Frequency of Busted Chart Patterns in Bull Markets
as a Percentage of All Patterns
Busted Chart Pattern	Busted Up Breakouts	Busted Down Breakouts
Big M		38%
Big W	18%
Broadening bottom	25%	42%
Broadening formation, right-angled and ascending	26%	48%
Broadening formation, right-angled and descending	29%	43%
Broadening top	29%	47%
Broadening wedge, ascending	19%	42%
Broadening wedge, descending	21%	47%
Bump and run reversal, bottom	12%
Bump and run reversal, top		22%
Cup with handle	10%
Cup with handle, inverted		29%
Diamond bottom	22%	35%
Diamond top	34%	33%
Double bottom, Adam & Adam	29%
Double bottom, Adam & Eve	23%
Double bottom, Eve & Adam	21%
Double bottom, Eve & Eve	20%
Double top, Adam & Adam		44%
Double top, Adam & Eve		40%
Double top, Eve & Adam		44%
Double top, Eve & Eve		36%
Head-and-shoulders bottom	16%
Head-and-shoulders, complex bottom	12%
Head-and-shoulders top		32%
Busted Chart Pattern	Busted Up Breakouts	Busted Down Breakouts
Head-and-shoulders, complex top		29%
Island bottom	33%
Island top		39%
Rectangle bottom	26%	43%
Rectangle top	26%	51%
Roof	32%	39%
Roof, inverted	35%	36%
Scallop, ascending	15%	35%
Scallop, inverted and ascending	17%
Scallop, descending	24%	31%
Scallop, descending and inverted	20%	28%
Three falling peaks		35%
Three rising valleys	14%
Triangles, ascending	29%	46%
Triangles, descending	28%	42%
Triangles, Symmetrical	32%	48%
Triple bottom	23%
Triple top		43%
V bottom	30%
V top		46%
Wedge, falling	31%	32%
Wedge, rising	21%	63%
Median	24%	40%
Busted Chart Pattern	Busted Up Breakouts	Busted Down Breakouts

Analysis

The above table shows how often a chart pattern busts as a percentage of all chart patterns of the same type and breakout direction, listed alphabetically. For example, I compared how often symmetrical triangles in bull markets with downward breakouts busted compared to those symmetricals that did not bust. Almost half (48%) of them busted. Upward breakouts did better, with 32% busting. Both numbers are alarming if you're not looking to trade a busted pattern. Price will move no more than 10% in the direction of the breakout before reversing. That doesn't give you much opportunity to profit.

For upward breakouts, inverted roofs bust most often, 35% of the time. For downward breakouts, rising wedges bust most often, at 63% of the time. Ouch!

Notice that downward breakouts bust more often than upward breakouts. That's true except for diamond tops which bust 34% of the time versus 33% of the time for upward and downward breakouts, respectively.

Cup with handles with upward breakouts bust the fewest number of times, 10%, but that's probably because they tend to be tall patterns with breakouts at the top of the pattern. Bump and run reversal tops busted the fewest number of times after downward breakouts. Those patterns are tall but the breakout is closer to the middle of the chart pattern.

When patterns bust, do they single, double or triple+ bust?

Of those chart patterns which bust, the table shows the frequency of each type of bust: single, double, or triple, sorted alphabetically by pattern name.

For example, when a Big M chart pattern busts, I found that 67% of them bust once, 2% double bust, and the remainder (31%) bust three or more times.

Table 2: Frequency of Single, Double, and Triple Busts
	Single Bust		Double Bust		Triple+ Bust
Busted Chart Pattern	Up Breakout	Down Breakout	Up Breakout	Down Breakout	Up Breakout	Down Breakout
Big M		67%		2%		31%
Big W	57%		32%		12%
Broadening bottom	56%	66%	27%	5%	17%	30%
Broadening formation, right-angled and ascending	53%	64%	31%	5%	16%	32%
Broadening formation, right-angled and descending	49%	69%	31%	3%	21%	27%
Broadening top	50%	66%	33%	3%	17%	30%
Broadening wedge, ascending	59%	83%	33%	3%	8%	14%
Broadening wedge, descending	53%	75%	31%	3%	16%	22%
Bump and run reversal, bottom	59%		32%		9%
Bump and run reversal, top		86%		3%		11%
Cup with handle	64%		26%		9%
Cup with handle, inverted		88%		3%		9%
Diamond bottom	47%	68%	30%	5%	23%	27%
Diamond top	47%	59%	42%	6%	11%	35%
Double bottom, Adam & Adam	55%		29%		16%
Double bottom, Adam & Eve	59%		28%		13%
Double bottom, Eve & Adam	53%		30%		17%
Double bottom, Eve & Eve	53%		35%		12%
Double top, Adam & Adam		55%		5%		40%
Double top, Adam & Eve		59%		6%		35%
Double top, Eve & Adam		65%		3%		32%
Double top, Eve & Eve		67%		5%		28%
Head-and-shoulders bottom	47%		36%		17%
Head-and-shoulders, complex bottom	57%		28%		15%
Head-and-shoulders top		67%		3%		30%
	Single Bust		Double Bust		Triple+ Bust
Busted Chart Pattern	Up Breakout	Down Breakout	Up Breakout	Down Breakout	Up Breakout	Down Breakout
Head-and-shoulders, complex top		63%		5%		32%
Island bottom	38%		36%		25%
Island tops		47%		5%		48%
Rectangle bottom	49%	66%	28%	1%	23%	32%
Rectangle top	39%	66%	28%	3%	33%	31%
Roof	49%	70%	33%	5%	18%	24%
Roof, inverted	48%	68%	36%	6%	17%	26%
Scallop, ascending	60%	77%	33%	4%	8%	19%
Scallop, inverted and ascending	60%		28%		12%
Scallop, descending	57%	78%	35%	3%	8%	20%
Scallop, descending and inverted	59%	85%	31%	2%	11%	12%
Three falling peaks		78%		4%		18%
Three rising valleys	65%		29%		6%
Triangles, ascending	50%	67%	34%	5%	16%	29%
Triangles, descending	45%	71%	33%	5%	23%	24%
Triangles, Symmetrical	46%	67%	33%	6%	22%	28%
Triple bottom	53%		31%		16%
Triple tops		67%		3%		31%
V bottom	74%		22%		4%
V top		84%		5%		11%
Wedge, falling	48%	71%	40%	3%	12%	26%
Wedge, rising	54%	76%	26%	3%	21%	22%
Median	53%	67%	31%	4%	16%	28%
Busted Chart Pattern	Up Breakout	Down Breakout	Up Breakout	Down Breakout	Up Breakout	Down Breakout
	Single Bust		Double Bust		Triple+ Bust

Performance Compared to Non-Busted Patterns

Please note that the header in the two right columns have been switched from the prior tables.

The following table compares the performance of single busted patterns with the non-busted counterparts. For example, a broadening top with a downward breakout that single busts sees price rise an average of 55%. The same pattern with a non-busted upward breakout sees price rise 42%.

Another example: An Adam & Adam double bottom which single busts sees price drop an average of 27%. A double top with a non-busted downward breakout sees price drop just 15%. Notice that I'm comparing a busted double bottom with a regular double top.

The trick in comparing these numbers is that the busted pattern busts just once. In actual trading, it might bust multiple times. The second table will give you a sense of how often patterns single, double, and triple bust.

Table 3: Performance of Single Busted versus Non-Busted Chart Patterns in Bull Markets, Sorted Alphabetically
	Single	-Busted	Non	-Busted
Busted Chart Pattern	Up Breakout	Down Breakout	Down Breakout	Up Breakout
Big M		55%		46%
Big W	23%		17%
Broadening bottom	24%	46%	15%	45%
Broadening formation, right-angled and ascending	23%	49%	14%	43%
Broadening formation, right-angled and descending	22%	60%	15%	43%
Broadening top	22%	55%	13%	42%
Broadening wedge, ascending	19%	49%	12%	41%
Broadening wedge, descending	22%	65%	13%	39%
Bump and run reversal, bottom	19%
Bump and run reversal, top		55%
Cup with handle	21%
Cup with handle, inverted		53%
Diamond bottom	19%	48%	19%	39%
Diamond top	22%	58%	17%	29%
Double bottom, Adam & Adam	27%		15%
Double bottom, Adam & Eve	24%		16%
Double bottom, Eve & Adam	25%		15%
Double bottom, Eve & Eve	23%		16%
Double top, Adam & Adam		37%		39%
Double top, Adam & Eve		52%		43%
Double top, Eve & Adam		51%		42%
Double top, Eve & Eve		54%		50%
Head-and-shoulders bottom	22%		16%
Head-and-shoulders, complex bottom	21%		17%
Head-and-shoulders top		67%		45%
	Single	-Busted	Non	-Busted
Busted Chart Pattern	Up Breakout	Down Breakout	Down Breakout	Up Breakout
Head-and-shoulders, complex top		50%		47%
Island bottom	21%		13%
Island tops		42%		31%
Rectangle bottom	27%	68%	16%	48%
Rectangle top	22%	71%	13%	51%
Roof	25%	49%	15%	34%
Roof, inverted	18%	61%	14%	34%
Scallop, ascending	21%	48%	15%	42%
Scallop, inverted and ascending	21%		15%
Scallop, descending	20%	54%	16%	39%
Scallop, descending and inverted	18%	52%	16%	47%
Three falling peaks		40%		49%
Three rising valleys	15%		20%
Triangles, ascending	22%	51%	13%	43%
Triangles, descending	26%	54%	15%	38%
Triangles, Symmetrical	23%	52%	12%	34%
Triple bottom	23%		14%
Triple tops		60%		46%
V bottom	22%		15%
V top		48%		40%
Wedge, falling	21%	53%	14%	38%
Wedge, rising	23%	56%	9%	38%
Median	23%	53%	15%	42%
	Single	-Busted	Non	-Busted
Busted Chart Pattern	Up Breakout	Down Breakout	Down Breakout	Up Breakout

Bulkowski on Busted Performance

How Often Do Chart Patterns Bust?

Analysis

When patterns bust, do they single, double or triple+ bust?

Performance Compared to Non-Busted Patterns

See Also