|
Written and copyright © 2005-2009 by Thomas N. Bulkowski. All rights reserved.
For more information on volume shapes, read my book,
Encyclopedia of Chart Patterns, Second Edition  .
Each chapter gives a complete review of the chart pattern, including tour, identification guidelines, focus on failures, performance statistics (including volume shapes), trading tactics, and sample trade. Below is just a sliver of the information contained in the book.
Volume has in five distinct
shapes but two types appear most often during the formation of chart patterns: U and dome.
The other shapes, up, down, and flat, I lump together as a random shape because they are
rare. Think of the random volume shape as not U and not dome.
Usually, the volume shape is obvious except in long chart patterns, such as rounding
turns, which may have several volume shapes.
Use the most recent volume shape (the volume shape closest to the breakout) as the
determining pattern. At the end of this
page is a table of patterns that don’t have a volume preference.
U-shaped volume
Dome shaped volume
Random shaped volume
No Performance Difference
U-shaped volume
Volume is higher at the ends
of the chart pattern than in the middle. Usually, the volume peaks correspond to
price turning points in the chart pattern.
U-shaped volume has the most chart patterns in its list – 27. The following
table shows which chart patterns do better
post breakout with U-shaped volume.
| Chart Patterns in a bull market | | Big W, up and down breakouts |
| Broadening formation, right-angled and ascending, down breakouts |
| Broadening formation, right-angled and descending, up breakouts |
| Broadening tops, down breakouts |
| Broadening wedge, ascending, up breakouts |
| Broadening wedge, descending, down breakouts |
| Bump-and-run reversal bottoms |
| Cup with handle |
| Diamond tops, down breakouts (tie with dome-shape) |
| Double bottoms, Eve & Eve |
| Double tops, Adam & Eve |
| Double tops, Eve & Eve (tied with random) |
| Flags, down breakouts |
| Head-and-shoulders bottoms |
| Head-and-shoulders bottoms, complex (tied with random) |
| Head-and-shoulders tops |
| Head-and-shoulders tops, complex |
| Island reversals, up breakouts |
| Pennants, up or down breakouts |
| Rounding tops, up or down breakouts |
| Scallops, ascending, up breakouts |
| Three falling peaks |
| Three rising valleys |
| Triangles, ascending, down breakouts. |
| Triangles, descending, up breakouts. |
| Triangles, symmetrical, up breakouts (tied with dome shape) |
| Triple tops |
| Wedges, rising, up breakouts |
Dome shaped volume
Dome shaped volume is the
inverted version of the U-shape. Volume is higher in the middle of the chart
pattern than at the ends. Dome shaped volume
has 17 patterns in its list, the smallest of the three shapes. The following table
shows which chart patterns do better with
dome-shaped volume.
| Chart Patterns in a bull market |
| Broadening formation, right-angled and ascending, up breakouts |
| Broadening tops, up breakouts |
| Diamond bottoms, up breakouts |
| Diamond tops, down breakouts(tie with U-shape) |
| Double bottoms, Adam &Adam |
| Double bottoms, Adam &Eve |
| Double bottoms, Eve &Adam |
| Double tops, Eve & Adam |
| Islands, long, up or down breakouts |
| Rectangle tops, down breakouts |
| Scallops, ascending, down breakouts |
| Scallops, descending, up breakouts |
| Triangles, descending, down breakouts (tied with random shape) |
| Triangles, symmetrical, up breakouts (tied with U shape) |
| Triple bottoms |
| Wedges, falling, down breakouts (tied with random shape) |
| Wedges, rising, down breakouts |
Random volume shape
A random volume shape is
one that is not domed and not U-shaped. It may be flat, inclined, declined, or just
have a rugged appearance with no discernable
shape. The random volume shape has 20 entries in its list, second only to the U
shape. The following chart patterns perform
better with a random volume shape.
| Chart Patterns in a bull market |
| Broadening bottoms, up or down breakouts |
| Broadening formation, right-angled and descending, down breakouts |
| Broadening wedge, descending, up breakouts |
| Diamond bottoms, down breakouts |
| Diamond tops, up breakouts |
| Double tops, Adam & Adam |
| Double tops, Eve & Eve (tied with U-shape) |
| Flags, up breakouts |
| Flags, high and tight |
| Head-and-shoulders bottoms (tied with U-shape) |
| Island reversals, down breakouts |
| Rectangle bottoms, up or down breakouts |
| Rectangle tops, up breakouts |
| Rounding bottoms |
| Scallops, descending, down breakouts |
| Triangles, ascending, up breakouts. |
| Triangles, descending, down breakouts (tied with dome shape) |
| Triangles, symmetrical, down breakouts |
| Wedges, falling, up breakouts |
| Wedges, falling, down breakouts (tied with dome shape) |
No Performance Difference
The following chart patterns
show no volume shape preference. That means performance is the same across all
volume shapes.
| Chart Patterns in a bull market |
| Broadening wedge, ascending, down breakouts |
| Bump-and-run reversal tops |
| Cup with handle, inverted |
| Scallops, ascending and inverted |
| Scallops, descending and inverted |
-- Thomas Bulkowski
Copyright © 2005-2009 by Thomas N. Bulkowski. All rights reserved. A closed mouth gathers no foot.
|
. If you buy ANYTHING, they pay for the referral.
on 