As of 08/22/2019
  Indus: 26,252 +49.51 +0.2%  
  Trans: 10,073 -34.32 -0.3%  
  Utils: 841 +0.59 +0.1%  
  Nasdaq: 7,991 -28.82 -0.4%  
  S&P 500: 2,923 -1.48 -0.1%  
YTD
 +12.5%  
 +9.8%  
 +17.9%  
 +20.4%  
 +16.6%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019
As of 08/22/2019
  Indus: 26,252 +49.51 +0.2%  
  Trans: 10,073 -34.32 -0.3%  
  Utils: 841 +0.59 +0.1%  
  Nasdaq: 7,991 -28.82 -0.4%  
  S&P 500: 2,923 -1.48 -0.1%  
YTD
 +12.5%  
 +9.8%  
 +17.9%  
 +20.4%  
 +16.6%  
  Targets    Overview: 08/15/2019  
  Up arrow27,200 or 24,900 by 09/01/2019
  Up arrow10,700 or 9,550 by 09/01/2019
  Up arrow850 or 790 by 09/01/2019
  Up arrow8,200 or 7,400 by 09/01/2019
  Up arrow3,000 or 2,750 by 09/01/2019

Bulkowski's Cat's Ears

 

The Cat's Ears chart pattern described here is based on the writing of Giorgos E. Siligardos in the December 2012 issue of Technical Analysis of Stocks & Commodities magazine. In essence, the chart pattern is a double top in a downward price trend. Siligardos adds an RSI kicker to boost performance.

I have not tested the chart pattern, so I do not offer any performance results nor have I verified the identification guidelines.

The Cat's Ears chart pattern
The Cat's Ears Pattern (in red)

Cat's Ears: Important Bull Market Results

Overall performance rank (1 is best): ?
Break even failure rate: ?
Average decline: ?
Pullback rate: ?
Percentage meeting price target: ?

This pattern has not yet been tested. See the glossary for definitions.

Cat's Ears: Identification Guidelines

CharacteristicDiscussion
DeclineLook for the stock to make a severe decline. This is phase 1 in the above figure. "Severe decline" has not been defined by the author.
PauseIn step 2, the decline stops and price moves essentially horizontally.
Left EarThe left ear forms. This is phase 3 in the above chart.
ScalpPrice pauses again between the two ears by moving sideways. This is step 4
Right EarThe right ear forms. See step 5.
Scalp Line BreakThe scalp line is the lowest price in the pattern (often set by the drop between the two ears). When price closes below the pattern's low, it confirms the pattern as valid.
VolumeThe typical volume pattern shows high volume at the tops of the ears and breaking of the scalp line (the breakout). Low volume can occur in phase 4 (pause between the two ears). Pullbacks often occur on low volume. Spikes in volume can appear at the start of phases 2, 3, 4, and 6.
DurationThe length of the cat's ears is between 10 days and 2 months (60 days).

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Cat's Ears: Trading Tips

Trading TacticExplanation The Cat's Ears chart pattern measure rule
The Measure Rule
Measure RuleTake the height of the pattern from highest peak (A) to lowest valley (B) and subtract it from the value of the lowest valley (B) to get the target C. See the figure on the right
RSIThe 14-period relative strength index (RSI) during the pattern remains below 65. The RSI value on the left ear is often lower than on the right.
RSI Above 65RSI values above 65 during formation of the pattern means the cat's ears is less bearish.
BearishIf the price of the left ear (peak) is above that of the right ear, the pattern is more likely to reach the measure rule target. An example of this scenario is shown on the right.

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Cat's Ears: Variations

The Cats Ears chart pattern variations

Siligardos has identified six variation of the basic Cat's Ears pattern, which I show in the accompanying chart.

Image 1: There is no phase 2, which is the horizontal movement before formation of the left ear. The arrow points to the missing phase 2.

Image 2: The left ear is below the peak of the right ear, noted by the two red circles.

Image 3: The left ear is above the peak of the right one, noted by the two red circles.

Image 4: The scalp line is high (see arrow).

Image 5: The scalp line is low (see arrow).

Image 6: Phase 2 (the horizontal movement leading to formation of the left ear) is volatile (see arrow).

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The Cats Ears chart pattern example

Cat's Ears: Example

Pictured is an example of the cat's ears chart pattern on the daily scale of the Dow Jones Industrials in early 2009.

The pattern begins with a strong thrust downward (1). Price moves horizontally briefly in phase 2 (2) followed by the rise up to the left ear (3).

Phase 4 sees the index drop to the cat's scalp (4) and returns to form a lower right ear at 5.

The breakout occurs when price tumbles below the scalp line (line A) and makes another strong move down (6).

-- Thomas Bulkowski

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See Also

 

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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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