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OPMR INGR SNDK Chart Patterns and Stock Patterns
Saturday, December 10, 2005

Chart pattern statistics are the result of a study done by Thomas Bulkowski in his book "Encyclopedia of Chart Patterns".

Percent of successful formations
Percentage of formations meeting predicted price target. Price targets are a calculated minimum price rise or decline.

Average rise or decline of successful formations
The measured average rise or decline from the price on the breakout day (using daily high or low) that is closest to the formation.

Likely rise or decline
Computed by measuring the individual percentage rise or decline for each formation and tabulating a frequency distribution of the results. The most likely rise or decline is the range with the highest frequency and usually excludes the rightmost column.

Failure rate
Percentage of formations that do not work as expected, including 5% failures. The numbers apply to formations once they stage a breakout (confirming the formation).

Average time to throwback completion
A throwback is an upside breakout that returns prices to the top of the formation or trendline boundary. A pullback is a downside breakout that returns prices to the bottom of the formation or trendline boundary. Both occur after a breakout and return within 30 days. The percentages for throwbacks apply to formations with upside breakouts only; pullback percentages appy to downside breakouts only.

Event Duration

If "Classic Patterns" is selected then the Pattern Duration criteria is enabled. This allows the investor to restrict the search to patterns that formed over a minimum or maximum number of days.

Technical Analysis publications often anticipate that if a stock exhibits the price movement suggested by a classic pattern, this will occur within a time period equivalent to the duration of the pattern. If the anticipated price movement does not occur within that time period, then the pattern may have broken down and the suggested price movement may not occur after all. This means that longer patterns anticipate possible price movement over a longer term, and shorter patterns anticipate possible price movement over a shorter term. The investor might set this criteria based on the desired trading horizon.

Inbound Trend Duration

This criteria is enabled if "Classic Patterns" or "Short-term Patterns" is selected. The trend leading into the pattern is often referred to as the "inbound trend". Many patterns indicate a reversal or continuation of this prior trend. Therefore it is useful for the investor to ensure that the prior trend was well-established.

Some technical analysts prefer an inbound trend that is at least as long as the pattern itself. In this case, if an investor is specifying a pattern duration of at least 30 days, then the investor might also want to specify an inbound trend duration of at least 30 days. The investor should note that it is not always necessary to have an inbound trend that is at least as long the pattern. In many cases, an inbound trend can be considered well-established if it is a shorter but strong rally or decline.


  stock technical analysis



stock technical analysis



  stock technical analysis




  stock technical analysis