Charting  |  APR 2003

Bullish Chart Patterns by Thomas Bulkowski

Bullish Chart Patterns by Thomas Bulkowski Can you recognize bullish patterns when they appear? Find out what they look like here. One day, the market will find a bottom and start building a base from which to launch another bull market. Will your market. Will your trading missiles be ready? How will you know when the time comes to turn the key and start buying again? One way is to look for bullish chart patterns and trade them, cautiously, when they appear. What should you look for? To answer that, let’s look at some of the more common chart patterns. BROADENING BOTTOMS Figure 1 shows a good example of what I call a broadening bottom. If you are familiar with broadening tops (see November–December 1996), bottoms are just the same, except that prices enter the formation after a downtrend. If the general market is at a turning point (from down to up), prices should reverse course and exit at the top of the chart pattern, but there is no guarantee of that. More than half the time (58%), the pattern acts as a reversal of the prevailing price trend. Still, 58% is only a slight improvement on randomness, so be sure to wait for the breakout.

by Thomas Bulkowski