As of 10/07/2024
Indus: 41,954 398.51 0.9%
Trans: 15,783 31.37 0.2%
Utils: 1,027 24.05 2.3%
Nasdaq: 17,924 213.95 1.2%
S&P 500: 5,696 55.13 1.0%

YTD
+11.3%
0.7%
+16.5%
+19.4%
+19.4%

43,500 or 41,600 by 10/15/2024
16,800 or 15,700 by 10/15/2024
1,125 or 1,025 by 10/15/2024
19,000 or 17,600 by 10/15/2024
5,900 or 5,600 by 10/15/2024

As of 10/07/2024
Indus: 41,954 398.51 0.9%
Trans: 15,783 31.37 0.2%
Utils: 1,027 24.05 2.3%
Nasdaq: 17,924 213.95 1.2%
S&P 500: 5,696 55.13 1.0%

YTD
+11.3%
0.7%
+16.5%
+19.4%
+19.4%
 
43,500 or 41,600 by 10/15/2024
16,800 or 15,700 by 10/15/2024
1,125 or 1,025 by 10/15/2024
19,000 or 17,600 by 10/15/2024
5,900 or 5,600 by 10/15/2024
 
Updated with new statistics on 12/28/2020.
The third edition of this book Encyclopedia of Chart Patterns has a table in most chapters discussing busted pattern performance.
$ $ $
Price can breakout of an ascending triangle in any direction. When price moves no more than 10%, reverses direction and closes beyond the side opposite the breakout, it busts the chart pattern.
In a bull market, price averages a drop of 13% (upward breakout, downward bust) and 36% (downward breakout, upward bust), but can be much higher if it busts just once.
I show a chart of a busted ascending triangle in Bassett Furniture on the daily scale. The ascending triangle is outlined with red trendlines. Price pierces the top trendline at A and confirms the chart pattern with an upward breakout. However, price does not rise far before it reverses. When price closes below the bottom of the triangle, which occurs at B, it busts the upward breakout. If price continues to move lower by at least 10%, then the chart pattern becomes a single busted ascending triangle.
For a single bust, look for:
For the last point, 4, if price fails to move more than 10%, then it could be forming a double busted ascending triangle.
The figure to the right shows an example of a double busted ascending triangle in Oneok.
The ascending triangle forms between the two red trendlines. This one has price closing below the upsloping trendline for a downward breakout. At A, the downward move reverses and climbs to B. When price closes above the top of the triangle, it busts the downward breakout for the first time. Price continues climbing to E, which is less than 10% above the highest peak in the triangle.
Then price tumbles. When it closes below the lowest valley in the ascending triangle, it busts the chart pattern for the second time. That happens at C. Notice that price continues at least 10% below the blue trendline (which shows the lowest valley in the pattern).
For a double bust, look for these elements.
If price fails to move at least 10% in the new direction, then it is a triple busted ascending triangle.
Exelon, pictured on the right, is a good example of a triple busted ascending triangle.
The triangle is outlined in a thin blue line on the far left of the chart. To the right of A, price closes below the upsloping trendline, constituting a breakout. Price drifts lower to B before reversing direction.
When price closes above the top of the triangle at C, it busts the triangle for the first time. Price continues to move higher to D, but that move is less than 10% above the blue line. Price reverses and drops to E. Notice that E is below the red line which highlights the bottom of the ascending triangle. The drop from the red line to E is less than 10%. The D to E move busted the triangle for the second time.
Then price stock reverses again and rises to G, closing above the blue line and busting the triangle for the third time. If price continues rising by at least 10% above the blue line, then the busting process would end at three busts. Otherwise, the stock can continue busting the triangle additional times by making tall swings above and below the chart pattern.
For a triple (or more) busted ascending triangle, look for the following:
Here's a few statistics from the book. This is for ascending triangles with downward breakouts (so they bust upward).
How could you trade a busted ascending triangle? The figure on the right gives an example.
An ascending triangle appears in December 2010. Price breaks out downward from this pattern at A then curls upward. To bust the pattern, I require price to close above the top of the triangle and that occurs at C. However, if you placed a buy order at a penny above the top of the triangle, that would get you into the trade at B (34.00). If you waited for a close, then you would buy into the stock at the open the day after C (35.60)
Waiting for a close above the top of the pattern before buying in the next day is the safer choice.
Price climbed in a strong push higher, joining a market that was also making a straightline run up.
In late February, the market faltered, but the stock waited until March to weaken. Nevertheless, it too, tumbled and then moved sideways until finding firmer ground in May.
After that, another strong push higher saw the stock reach D, at 41.58, about two weeks after the market peaked. Point D was the highwater mark for the stock. It returned to below 30 within 5 months.
If you traded this one perfectly, you could have made between 22% (buying at B) to 17% (entering at the open the day after C).
 Thomas Bulkowski
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