As of 12/05/2024
Indus: 44,766 -248.33 -0.6%
Trans: 16,976 -190.93 -1.1%
Utils: 1,047 +2.22 +0.2%
Nasdaq: 19,700 -34.86 -0.2%
S&P 500: 6,075 -11.38 -0.2%
|
YTD
+18.8%
+6.8%
+18.8%
+31.2%
+27.4%
|
44,000 or 46,000 by 12/15/2024
17,025 or 18,000 by 12/15/2024
1,025 or 1,100 by 12/15/2024
20,000 or 18,500 by 12/15/2024
6,200 or 5,900 by 12/15/2024
|
As of 12/05/2024
Indus: 44,766 -248.33 -0.6%
Trans: 16,976 -190.93 -1.1%
Utils: 1,047 +2.22 +0.2%
Nasdaq: 19,700 -34.86 -0.2%
S&P 500: 6,075 -11.38 -0.2%
|
YTD
+18.8%
+6.8%
+18.8%
+31.2%
+27.4%
| |
44,000 or 46,000 by 12/15/2024
17,025 or 18,000 by 12/15/2024
1,025 or 1,100 by 12/15/2024
20,000 or 18,500 by 12/15/2024
6,200 or 5,900 by 12/15/2024
| ||
Updated with new statistics on 8/25/2020. Added Lessons 7/24/2023.
The right-angled and descending broadening chart pattern about ties with the performance of right-angled ascending broadening pattern in a bull market (43% average rise). The break even failure rate is slightly above average, though, at 21%. This is not a chart pattern you'll want to curl up with at night and dream about.
$ $ $
For detailed information on this chart pattern, read Encyclopedia of Chart Patterns, 3rd edition (#ad) If you click the link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski
$ $ $
The picture shows a right-angled and descending broadening formation (RABFD).
Right-Angled and Descending Broadening Formation
|
The above numbers are based on 601 samples for upward breakouts and 335 for downward breakouts. See the glossary for definitions.
Characteristic | Discussion |
Price trend | Can be up or down leading to the pattern. |
Shape | A megaphone tilted down with the top horizontal. |
Trendlines | The top trendline is horizontal, the bottom one slopes downward. |
Touches | At least five touches total, three peaks or three valleys should touch the associated trend line with two or more touches of the other trendline. Ideally, the second of three touches will touch (instead of coming 'close' to) the trendline. |
Breakout | Upward 64% of the time. |
Trading Tactic | Explanation | The Measure Rule |
Measure rule | Compute the height from the horizontal trendline (B in the Measure Rule figure to the right) to the lowest valley (A) and multiply it by the above 'percentage meeting price target.' Add the result to the horizontal trendline (B, upward breakouts) or subtract it from the lowest valley (A, downward breakouts) to get the price target (C). | |
Intraformation trade | Buy at the bottom trendline when price starts rising and sell or sell short once price turns at the horizontal trendline. | |
Buy at 3rd touch | When price touches the bottom trendline for the third time and begins rising, buy. | |
Partial rise | A partial rise works 47% of the time. | |
Partial decline | A partial decline works 75% of the time. | |
Price trend | The best performing patterns are those with an intermediate-term (3-6 months) price trend leading to the pattern. | |
Yearly middle | For downward breakouts, the lowest third of the yearly price range performs best. Upward breakouts do best in the middle third of the range. | |
Volume trend | A rising volume trend results in the best post breakout performance. |
Breakout Direction | 1990s | 2000s | 2010s |
Up (average) | 35% | 53% | 35% |
Down (average) | 16% | 13% | 17% |
The table above shows the performance of right-angled descending broadening top chart patterns in bull markets over the last three decades.
Upward breakouts did best in the 2000s but the other two decades held steady.
Downward breakouts did worst in the 2000s and outperformed in the 2010s.
The above figure shows an example of a right-angled and descending broadening formation chart pattern. Price begins a decline at A that leads to the chart pattern. Price bounces between a horizontal trendline on the top and a down-sloping one along the bottom of the chart pattern. A partial decline at B signals an impending upward breakout at C. After the breakout, price makes a strong move upward.
Below are some of the lessons I learned from trading these patterns over the decades. You can use the Patternz simulator to reproduce the charts in full. I downloaded the data from Tiingo but not all stocks currently trade.
I present the information in slider format, so be sure to click the left or right arrows to view another slide.
Please note: These tips are for swing traders or even scalpers, those who want to trade from low to high or skim off a few bucks, and not for buy-and-hold investors.
-- Thomas Bulkowski
Support this site! Clicking any of the books (below) takes you to
Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notice for paid links: "As an Amazon Associate I earn from qualifying purchases."
My Stock Market Books
|
My Novels
|
Does the information superhighway have any rest stops?