As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/18/2024
Indus: 37,775 +22.07 +0.1%
Trans: 14,947 -39.62 -0.3%
Utils: 860 +6.95 +0.8%
Nasdaq: 15,602 -81.87 -0.5%
S&P 500: 5,011 -11.09 -0.2%
|
YTD
+0.2%
-6.0%
-2.4%
+3.9%
+5.1%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
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Visual Guide to Chart Patterns
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After an upward the breakout from a chart pattern, price lifts off then falters and returns to the launch price. This curling price behavior is called a throwback if it occurs within a month of the breakout.
| Characteristic | Discussion |
| Shape | Throwbacks can assume any shape. |
| Time | By convention, a throwback occurs within 30 calendar days after the breakout. |
| White space | The stock must not slide along the breakout price but zoom up, curl around and return to, or come close to, the breakout price or chart pattern trendline (boundary). |
| Volume | High volume breakouts have a tendency to throwback more often than low volume ones. |
| Trading Tactic | Explanation | 
|
| Expect one | Expect a throwback will occur. | |
| Overhead resistance | This is the chief cause of a throwback. Price bumps up against overhead resistance and then price tumbles. Be sure to look for prior peaks and valleys, horizontal consolidation regions (HCRs), and other signs of overhead resistance before trading. | |
| Throwback rate | Since year 2000, 58% of 10,305 chart patterns with upward breakouts had throwbacks. | |
| Time | Price climbs for 6 days after the breakout, on average, before beginning the return journey. | |
| Loop time | It takes an average of 10 days, total, for price to complete the return trip back to the breakout, as measured from the breakout day to the day price returns. | |
| Height | The average height from the breakout price to the top of the throwback is 8%, but a frequency distribution shows that most rise 4% to 10%. | |
| Volume | A high volume (above the 30-day average) breakout throws back 70% of the time, on average. | |
| Price drop | After the stock returns to the breakout price, 35% continue dropping below the chart pattern. That means 65% of the time price recovers. |
For additional information on throwbacks and how you can improve profits by placing a tight stop, see the study on Money management.
The measure rule for throwbacks is similar to the measured move up chart pattern. Using the figure to the left as a reference, find where the upward price trend begins (the swing low at point A) and subtract the price from where the trend ends at B (the swing high). Add the difference to the throwback low at C to get a price target.
The price trend leading to the breakout can help determine whether price will throwback or not. If price has more than 3 consecutively higher closes ending the day before the breakout, then expect price to have a lower probability of throwing back. See the study, Price Trends Leading to the Breakout.
During a throwback attempt, if price remains above the breakout price, then expect a more powerful move than if price drops below the breakout. I measured this in 19 chart pattern types from July 1991 to March 2005 and found 10,348 chart patterns. Of that group, 3,167 had throwbacks. When price remained equal to or above the breakout price, the rise averaged 40% (400 samples qualified). When price dropped below the breakout, the resulting rise averaged just 29% (2,767 samples). The numbers measure the rise from the breakout to the ultimate high, which is the highest high before price tumbles by at least 20%.
-- Thomas Bulkowski
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