As of 08/12/2022
  Indus: 33,761 +424.38 +1.3%  
  Trans: 15,147 +74.16 +0.5%  
  Utils: 1,042 +15.91 +1.6%  
  Nasdaq: 13,047 +267.38 +2.1%  
  S&P 500: 4,280 +72.88 +1.7%  
YTD
-7.1%  
-8.1%  
 +6.2%  
-16.6%  
-10.2%  
  Targets    Overview: 07/28/2022  
  Up arrow34,500 or 31,850 by 09/01/2022
  Up arrow16,300 or 14,300 by 09/01/2022
  Up arrow1,075 or 990 by 09/01/2022
  Up arrow13,600 or 12,000 by 09/01/2022
  Up arrow4,325 or 4,000 by 09/01/2022
CPI (updated daily): Arrows on 7/15/22
As of 08/12/2022
  Indus: 33,761 +424.38 +1.3%  
  Trans: 15,147 +74.16 +0.5%  
  Utils: 1,042 +15.91 +1.6%  
  Nasdaq: 13,047 +267.38 +2.1%  
  S&P 500: 4,280 +72.88 +1.7%  
YTD
-7.1%  
-8.1%  
 +6.2%  
-16.6%  
-10.2%  
  Targets    Overview: 07/28/2022  
  Up arrow34,500 or 31,850 by 09/01/2022
  Up arrow16,300 or 14,300 by 09/01/2022
  Up arrow1,075 or 990 by 09/01/2022
  Up arrow13,600 or 12,000 by 09/01/2022
  Up arrow4,325 or 4,000 by 09/01/2022
CPI (updated daily): Arrows on 7/15/22

Bulkowski on Roof Patterns

Statistics updated 8/26/2020.

My book, Encyclopedia of Chart PatternsEncyclopedia of Chart Patterns book., pictured on the left, discusses 63 chart patterns. The first and second editions don't cover the roof pattern, though. Sorry.

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

-- Tom Bulkowski

$ $ $

The roof pattern is one I discovered in early 2005. I thought of it as a half diamond but a friend called it a roof pattern and that's more descriptive. This pattern is rare and the performance isn't good either.

Roof chart pattern
Roof Chart Pattern

 

Roof: Important Bull Market Results

Overall performance rank for up/down breakouts (1 is best): 35 out of 39/16 out of 36
Break even failure rate for up/down breakouts: 26%/22%
Average rise/decline: 34%/15%
Throwback/pullback rate: 60%/66%
Percentage meeting price target for up/down breakouts: 62%/63%

The above numbers are based over 300 perfect trades. See the glossary for definitions.

Roof: Identification Guidelines

CharacteristicDiscussion
Daily or weekly chartI used the daily chart to locate roof patterns, but they may appear on other timeframes as well.
Price trendUsually upward leading to the pattern.
ShapeHas a horizontal or near horizontal bottom with up sloping trend in the first part of the pattern followed by a down-sloping trend in the last part of the pattern.
UptrendThe best performing roof patterns appear after a sharp rise like you sometimes see in diamond patterns.
SymmetricalThe two halves of the roof should appear symmetrical. Allow variations, but most look like an inverted V with price touching the horizontal bottom (in minor low) at least three times.
Head-and-shoulders topMake sure the pattern isn't a head-and-shoulders top or a complex head-and-shoulders top.
ConfirmationThe pattern confirms as valid when price closes outside the trendline boundary. The breakout can be in any direction.

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Roof: Trading Tips

Trading TacticExplanation Roof chart pattern measure rule
The Measure Rule
Measure ruleReference the Measure Rule figure to the right. Compute the height (the difference between the roof's high, A, and the low, B) and then multiply it by the above 'percentage meeting price target.' Subtract the result from the lowest low in the pattern (B) to get a target. The Measure Rule figure to the right shows the measure for a downward breakout.
DowntrendsThe best performing roofs appear in downtrends, but they will be rare.
ConfirmationWait for confirmation before placing a trade because the breakout can be in any direction (downward predominates at 58% of the time).
PullbacksPullbacks hurt performance.
HeightTall patterns outperform short ones. Measure the height from highest peak to the horizontal bottom and divide it by the price of the horizontal bottom (the breakout price). Height to breakout price values over 8.7% (for downward breakouts, 9.2% for upward breakouts) are considered tall.

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Roof: Example

Roof chart pattern example

The above figure shows an example of a roof chart pattern. Aren't you impressed?

Price crosses the pattern from top to bottom, touching a horizontal trendline at least three times in minor lows.

In this example the upward breakout occurs when price closes above the down-sloping trendline.

-- Thomas Bulkowski

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See Also

 

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 notices: "As an Amazon Associate I earn from qualifying purchases." Paid links).

My novels:  Bedroom to Boardroom bookBedroom to Boardroom book Remember Me bookRemember Me book Bumper's Story book Head's Law book

Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book


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