Encyclopedia of Chart Patterns. Thomas N. Bulkowski

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      Table 10.2 shows general statistics for right‐angled and descending broadening formations.

Number found. I found 1,150 patterns in 668 stocks from August 1991 to October 2019. However, that included bear market patterns, and there were not enough of those to include in the statistics. Not all of the stocks covered the entire period, and some no longer trade. Notice that the pattern favors upward breakouts, judging only by the numbers.

Table 10.2 General Statistics

Description	Up Breakout	Down Breakout
Number found	601	335
Reversal (R), continuation (C) occurrence	38% R, 62% C	58% R, 42% C
Reversal, continuation performance	45% R, 41% C	–14% R, –17% C
Average rise or decline	43%	–15%
Standard & Poor's 500 change	12%	–2%
Days to ultimate high or low	244	51
How many change trend?	54%	27%

      Reversal (R), continuation (C) occurrence. Upward breakouts act as continuation patterns most often, but downward breakouts act as reversals. Recall that a reversal has price leaving the chart pattern in a direction opposite the way it entered. Continuation patterns have price exit in the same direction as the prevailing price trend.

      Reversal/continuation performance. Upward breakouts show better performance from reversal patterns, but downward breakouts favor continuations.

      Average rise or decline. Shown in the table is the average rise or decline. Nothing spectacular here.

      Standard & Poor's 500 change. I compared the date of the breakout to the ultimate high or low posted by the chart pattern and compared those to the index. The index shows it didn't perform nearly as well as the broadening pattern over the same holding period.

      Days to ultimate high or low. Upward breakouts take an average of about 8 months to reach the ultimate high, but downward breakouts end faster, in about 2 months. The yardage traveled is different, though, because upward breakouts rise 43% and downward breakouts drop 15%. If you do the math, we find that the downward breakout should have reached bottom in 85 days, not 51. So, price dropped faster than it climbed.

      How many change trend? I added this measure to help decide which chart patterns lead to outsized gains (a gain or loss of more than 20%). The results shown in the table are mid‐list numbers. The upward breakout number is good (more than half the patterns see decent gains), but downward breakouts fall well short of a 20% loss (just 27% drop that far).

Table 10.3 shows various failure rates for the two breakout directions. How do you make sense of the table? It is easier to understand by example. I found that 21% of the patterns with upward breakouts failed to see price rise more than 5%. Over half (51%) of the patterns failed to see price rise more than 25% after an upward breakout.

Table 10.3 Cumulative Failure Rates

Maximum Price Rise or Decline (%)	Up Breakout	Down Breakout
5 (breakeven)	125 or 21%	77 or 23%
10	65 or 32%	72 or 33%
15	46 or 39%	50 or 59%
20	43 or 46%	45 or 73%
25	29 or 51%	29 or 81%
30	44 or 59%	21 or 88%
35	28 or 63%	15 or 92%
50	65 or 74%	17 or 97%
75	55 or 83%	9 or 100%
Over 75	101 or 100%	0 or 100%

Table 10.4 Breakout and Post‐Breakout Statistics

Description	Up Breakout	Down Breakout
Breakout direction	64% up	36% down
Performance of breakouts occurring near the 12‐month low (L), middle (M), or high (H)	L 46%, M 49%, H 41%	L –19%, M –14%, H –12%
Throwbacks/pullbacks occurrence	64%	69%
Average time to throwback/pullback peaks	5% in 6 days	–7% in 6 days
Average time to throwback/pullback ends	12 days	12 days
Average rise/decline for patterns with throwbacks/pullbacks	43%	–15%
Average rise/decline for patterns without throwbacks/pullbacks	42%	–15%
Percentage price resumes trend	71%	55%
Performance with breakout day gap	35%	–18%
Performance without breakout day gap	44%	–15%
Average gap size	$0.45	$0.37

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