Encyclopedia of Chart Patterns. Thomas N. Bulkowski
Читать онлайн книгу.
in the table.
At the bottom of the pattern is point A. Price reaches A just over a third of the time.
You can use these findings to help calculate where your stock might turn. Because you're dealing with probabilities, anything can happen.
Sample Trade
Figure 4.4 shows how Pete used a bearish bat. He bought the stock when it broke out to a new high, at E (the highest price bar on the chart). “Don't laugh,” he told me. “How many of these zingers have you got caught in?”
I didn't say a word, but blushed instead. Many years ago I bought a stock and watched it more than double. Wonderful! But I felt it had more to give so I held on. It lost all of its gains, dropped in half, and I sold near the low. Oops. Then it recovered. Of course it recovered with me watching from the sidelines.
So I know how Pete feels. Maybe you do, too. As traders, we all make mistakes. And that's the beauty of experience. It allows you to recognize a mistake when you make it again.
Pete believed in the company and had profited over the years by holding onto the stock. He checked in every few weeks and saw price continuing to move lower. The decline didn't bother Pete. Why?
“Because it's a chance to buy the stock at a lower price. Like it's on sale.”
Figure 4.4 Pete bought near the high and made a quick swing trade after D.
He made a fortune using the buy‐the‐dip method to trade stocks (that is, buy when price makes a significant dip). The problem with that logic is that the stock has to recover. “I have faith,” he said and pulled out a cross draped on a necklace strung around his neck. He kissed the cross and then tucked it back under his shirt.
Pete's computer alerted him to the bearish bat pattern which formed as labeled on the chart (XABCD).
With additional shares, he decided to trade the throwback (which didn't occur in this pattern). He set a buy order to grab 1,000 shares a penny above X (not D) or 159.37. The stock gapped open higher (breakaway gap) and he received a fill at the open at F, at 163.25.
He used a limit order to sell his 1,000 shares at 5% above X, or 167.34.
The next day, the order filled. He made just over $4,000 in two days. Of course, if he'd held onto the shares and sold at the ultimate high in late January 2020 at 327.85, he would have double his money. That's for a perfect trade, of course.
If he'd held during the Covid‐19 bear market and sold at the late March 2020 low, he'd still pocket almost $50,000.
5 Bat®, Bullish
RESULTS SNAPSHOT
Appearance: Looks like a big M with turns located by Fibonacci ratios.
Upward Moves
| Bull Market | |
| Performance rank | 1 (best) out of 5 |
| Breakeven failure rate | 10.2% |
| Average rise | 44.3% |
| Volume trend | Downward |
| Point D reversal rate | 91% |
| See also | Big M, double tops, bullish AB=CD, bullish crab, bullish butterfly, and bullish Gartley |
The bullish bat is a Big M chart pattern except that Fibonacci ratios determine the turning points. I don't show bear market statistics in this chapter because I found just 53 patterns. That's too few to be worth discussing, especially when sorted into different categories.
I found 259 bullish bats in the data I searched. That's too few to be comfortable drawing conclusions, but let's live dangerously, shall we?
I measured performance of Fibonacci‐based patterns differently than I do other chart pattern types. That's because we're looking for a reversal at the end of the pattern and not an up or down breakout. Therefore, the layout of this chapter is different from most other chapters in this book.
The Results Snapshot (previous page) shows the average rise from the low at turn D is 44.3%, which is quite good. That beats the 42.4% average gain for non‐Fibonacci‐based patterns. Failures, at about 10% of patterns, are also quite good. They are well below the 15.3% failure rate for non‐Fibonacci patterns.
Swing traders will want to buy long at turn D. Price turns upward at D 91% of the time in the bats I looked at. That's sensational. It's a headline performance.
The performance rank, which is based on the average rise from point D when compared to other Fibonacci patterns, is first out of five. It's the best performing Fibonacci pattern. The performance rank of bear market patterns (not shown) is also first (best), out of five contenders.
Tour
Figure 5.1 shows what a bullish bat pattern looks like, one that performs better than expected. The pattern has five turning points, cleverly labeled X, A, B, C, and D. Why is X labeled as the first turning point? I haven't a clue, I'm too lazy to find out, and that's the convention. So that's what I use.
In Figure 5.1, the bat appeared when price formed a second bottom at X, mirroring the valley in October. Price recovered to the top of a trading range setup by prior peaks (and valleys) and hit turn A, the top of the pattern. Price found overhead resistance there that it couldn't overcome. So price retraced in an ABC‐type consolidation (that is, a drop to B, upward retrace to C, and drop to D). The stock broke out upward at F when price closed above the top of the pattern, pushed through a ceiling of resistance, and soared.
Figure 5.1 This bullish bat breaks out upward (at F) and makes a strong push higher.
Volume trended upward, which I show at E. This is one of the few bats to show an upward volume trend. Based on the average, bats with an upward volume trend tend to underperform. I will discuss statistics later in this chapter.
Identification Guidelines
Table 5.1 shows the identification guidelines for the bullish bat. Use Figure 5.2 as a reference. If you don't have a computer that can find these patterns, give up now. Go search for a Big M or double top instead. They are easier to find because you don't have to do any calculation. Plus, bats are as rare as Klingons on Vulcan (or so I assume. I haven't visited there recently).
Figure 5.2 shows a bullish bat at turns XABCD. This one sees price climb after D, but breaks out downward, at E.
Appearance. If you draw lines connecting turns XAB (and back to X), and connect BCD (and back to B), you'll notice that the two halves