As of 12/06/2022
Indus: 33,596 -350.76 -1.0%
Trans: 13,898 -150.08 -1.1%
Utils: 979 +8.73 +0.9%
Nasdaq: 11,015 -225.05 -2.0%
S&P 500: 3,941 -57.58 -1.4%
|
YTD
-7.5%
-15.7%
-0.2%
-29.6%
-17.3%
|
 35,500 or 32,800 by 12/15/2022 13,400 or 14,500 by 12/15/20221,000 or 925 by 12/15/202212,000 or 10,600 by 12/15/20224,250 or 3,850 by 12/15/2022 |
As of 12/06/2022
Indus: 33,596 -350.76 -1.0%
Trans: 13,898 -150.08 -1.1%
Utils: 979 +8.73 +0.9%
Nasdaq: 11,015 -225.05 -2.0%
S&P 500: 3,941 -57.58 -1.4%
|
YTD
-7.5%
-15.7%
-0.2%
-29.6%
-17.3%
|
|
35,500 or 32,800 by 12/15/202213,400 or 14,500 by 12/15/20221,000 or 925 by 12/15/202212,000 or 10,600 by 12/15/20224,250 or 3,850 by 12/15/2022 | |
Statistics updated: 8/27/2020.
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Encyclopedia of Chart Patterns Second Edition
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The 3 falling peaks chart pattern sports three peaks, each successive one is below the prior one. When price closes below the lowest valley between the three peaks, it confirms the three falling peaks chart pattern as valid.
The first sign of a trend change from up to down begins with a lower peak, so this chart pattern can be used as an indicator of the start of a bear trend either in an individual stock or the entire market (when it occurs in an index or average). Unfortunately, waiting for the pattern to confirm before exiting a position may mean a loss or large profit give-back, so its use as a bear market indicator is not recommended. Nevertheless, if the pattern appears, it means to avoid long positions.
|
Overall performance rank (1 is best): 21 out of 36
Break even failure rate: 22%
Average decline: 15%
Pullback rate: 66%
Percentage meeting price target: 23%
The above numbers are based on 2,300 perfect trades. See the glossary for definitions. |
The Three Falling Peaks Chart Pattern |
| Characteristic | Discussion |
| Price trend | Upward leading to the pattern then price trends downward. |
| Shape | Three peaks, each one lower than the prior one. |
| Symmetry | Each peak should look similar to the others. If you select wide, thick peaks, they should all look that way. The peaks do NOT have to follow a trendline. |
| Confirmation | The pattern confirms as valid when price closes below the lowest valley in the pattern. |
| Trading Tactic | Explanation | 
Measure Rule
|
| Measure rule | Reference the Measure Rule figure to the right. Compute the height from highest peak (1) to lowest valley (2) then multiply it by the above 'percentage meeting price target.' Subtract the result from the lowest valley (2) in the pattern to get a price target (3). The link highlighted on the left provides more information on the measure rule. | |
| Valley short | Reference the Valley Short figure to the right. For aggressive traders: If the first valley (point A, between peaks 1 and 2) is below the second (point B between peaks 2 and 3), use the second valley (B) as the confirmation price, not the lowest valley (A). | |
| Stop | Place a stop slightly above the most recent minor high (point 3) in the three falling peaks chart pattern. If you are unfamiliar with stop placement, click the link to the left. | |
| Cover | If price rises above any of the peaks, then cover the short. | 
Valley Short
|
| Pullbacks | Pullbacks hurt performance. The link to the left provides more information about pullbacks and this link provides performance. |
The above figure shows an example of the three falling peaks chart pattern. Peaks 1, 2, and 3 mark the three peaks of the chart pattern. Point 4 is the confirmation price, the price at which squiggles on the stock chart become a three falling peaks chart pattern.
Taking the height from peak 1 (the highest high in the three falling peaks chart pattern) and valley 4 (the lowest low between the three peaks), multiplying it by 23% (the percentage meeting price target from Important Bull Market Results table) gives a target of about 77. When the stock opened after the company issued an earnings warning, price gapped lower and reached the target the same day. Basing a new target on the full height (point 1 minus point 4, subtracted from point 4) gives a target of about 69. The stock reached that target within the month.
-- Thomas Bulkowski
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