Bulkowski's Inverted and Ascending Scallops

As of 08/06/2020

Indus: 27,387 +185.46 +0.7%

Trans: 10,331 +115.68 +1.1%

Utils: 829 +3.50 +0.4%

Nasdaq: 11,108 +109.67 +1.0%

S&P 500: 3,349 +21.39 +0.6%

YTD

-4.0%

-5.2%

-5.7%

+23.8%

+3.7%

Targets Overview: 07/31/2020

28,150 or 25,000 by 08/15/2020

10,600 or 9,400 by 08/15/2020

870 or 800 by 08/15/2020

11,300 or 10,200 by 08/15/2020

3,355 or 3,100 by 08/15/2020

CPI (updated daily): Arrows

on 6/29/20

As of 08/06/2020

Indus: 27,387 +185.46 +0.7%

Trans: 10,331 +115.68 +1.1%

Utils: 829 +3.50 +0.4%

Nasdaq: 11,108 +109.67 +1.0%

S&P 500: 3,349 +21.39 +0.6%

YTD

-4.0%

-5.2%

-5.7%

+23.8%

+3.7%

Targets Overview: 07/31/2020

28,150 or 25,000 by 08/15/2020

10,600 or 9,400 by 08/15/2020

870 or 800 by 08/15/2020

11,300 or 10,200 by 08/15/2020

3,355 or 3,100 by 08/15/2020

CPI (updated daily): Arrows

on 6/29/20

Bulkowski's Ascending and Inverted Scallops

For more information on this pattern, read Encyclopedia of Chart Patterns Second Edition

Encyclopedia of Chart Patterns 2nd Edition book.

, pictured on the right, pages 639 to 653. That chapter gives a complete review of the chart pattern, compared to what is described below.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

Ascending and Inverted Scallop Overview

The inverted and ascending scallop looks like the right half of an umbrella. The beauty of this chart pattern is that it performs so well in both bull and bear markets, sporting a low break even failure rate and a large average rise.

Discovered by Thomas Bulkowski in the early 2000's but it may have been uncovered by others earlier.

Important Bull Market Results for Ascending and Inverted Scallops

The above numbers are based on 1,748 perfect trades. See the glossary for definitions.

Ascending and Inverted Scallop Identification Guidelines

Characteristic	Discussion
Price trend	Most often you'll see these in an upward trend leading to the pattern or at the bullish turning point of a downward price trend.
Shape	Inverted and backward J shape. It looks like the right half of an umbrella. The rise should be a straight, or nearly straight run up, then rounded at the top followed by a small decline.
Smooth top	The peaks should form a rounded turn but larger patterns may not be as smooth.
Retrace	The end of the pattern on the right usually retraces 54% of the prior up move. Avoid 100% retraces.
Volume	Trends downward 70% of the time
Confirmation	The pattern confirms when price closes above the highest high in the pattern.

Ascending and Inverted Scallop Trading Tips

Trading Tactic	Explanation
Measure rule	Compute the height from the highest peak (B) to the lowest valley in the pattern (A) and then multiply it by the above 'percentage meeting price target.' Add the difference to the highest peak (B) to get a price target C. The link to the left provides more information on the measure rule.
Stop	If price drops below the right scallop edge, sell. See the measure rule figure to the right for the proper stop location.
Buy	Buy when price closes above the highest peak in the pattern (B).
Swingers	Swing traders will want to buy when price bottoms on the right and sell when it climbs to the top of the pattern.
Avoid	If price drops below the start of the pattern (A), then avoid this one.
Avoid valley	If price forms a distinct right valley and then price drops below the valley, sell. The figure to the right ("New Stop Location") shows the proper location for a stop in this situation.
Breakout volume	Heavy breakout volume suggests better performance. The link shown to the left discusses statistics on breakout volume. The following link gives additional information on other chart patterns that also do well after heavy breakout volume.

Inverted and ascending scallop measure rule

The Measure Rule

Inverted and ascending scallop avoidance

New Stop Location

Ascending and Inverted Scallop Example

The figure on the right shows an example of an inverted and ascending scallop chart pattern. Price bottoms at point A and then rises to B where it rounds downward to C.

To calculate a price target, subtract the price of valley A from peak B. That finds the height. Multiply the height by 61% (the percentage meeting price target from Important Bull Market Results table near the top of this page) and add the result to the price at B. Place a stop loss order a few pennies below C, and raise the stop as price climbs.

Other Ascending and Inverted Scallop Examples