Home Technical Analysis Chart Patterns: Data Driven Research

Chart Patterns: Data Driven Research

Chart patterns are visual cues that traders use when analyzing stock prices. They’re important because they can indicate what might happen in the future.

We publish original research on important stock chart patterns, success rates, reliability, and profitability so that you can trade better.

Knowing these chart patterns can give traders an edge when making informed decisions on their trading strategies.

We help you understand stock chart patterns and how they can benefit your trading. We cover each pattern and how to use them, plus we discuss the success, accuracy and probabilities of each pattern.

Wyckoff Method Explained: Accumulation & Distribution Trading

The Wyckoff Method is built upon three cardinal laws that govern the financial markets: the Law of Supply and Demand, the Law of Cause and Effect, and the Law of Effort versus Result.

12 Accurate Chart Patterns Proven Profitable & Reliable

Research shows the most reliable chart patterns are the Head and Shoulders, with an 89% success rate, the Double Bottom (88%), and the Triple Bottom and Descending Triangle (87%). The Rectangle Top is the most profitable, with a 51% average win.

Cup and Handle Pattern: Trading a 95% Reliable Chart Pattern

Twenty years of trading research show the cup and handle pattern has a 95% success rate in bull markets and returns an average profit of +54%. The cup and handle chart pattern is reliable and accurate but can be difficult to identify.

One Bull Flag Pattern Succeeds 85%, The Rest Fail

A bullish flag is a popular but misunderstood technical analysis pattern characterized by a rapid upward price trend followed by parallel downslope consolidation in price. The price increase resembles a flag pole, while the price consolidation is the flag.

How to Trade a Rectangle Pattern’s 85% Success Rate

A rectangle is a well-established technical analysis pattern with a predictive accuracy of 85%. The pattern is flexible, can break out up or down, and is a continuation or reversal pattern.

Inverse Cup and Handle: 82% Reliability for Short-Sellers

The inverse cup and handle chart pattern is a technical analysis trading strategy. Traders use it to identify a breakdown in asset prices, aiming to profit from short-selling a sharp price decline. The inverse cup and handle chart pattern is considered reliable based on 556+ trades, with an 82% success rate in bull markets.

8 Bearish Chart Patterns Proven Accurate & Reliable

Decades of research prove the most profitable bearish chart patterns are the Inverted Cup and Handle with an average -17% price decrease, Rectangle Top (-16%), Head and Shoulders (-16%), and the Descending Triangle (-15%).

Bear Flag Pattern: Reliability & Success Rate Based On Data

Be careful when trading bearish flags. According to published research, the bear flag pattern has a low success rate of 45%. This means you are flipping a coin when trading this pattern, as the odds are not in your favor. The high-tight bear flag is the only flag pattern you should trade.

10 Bullish Chart Patterns Proven Effective & Profitable

Research shows the most reliable and accurate bullish patterns are the Cup and Handle, with a 95% bullish success rate, Head & Shoulders (89%), Double Bottom (88%), and Triple Bottom (87%). The most profitable chart pattern is the Bullish Rectangle Top, with a 51% average profit.

Bear Pennant: Why Traders Must Avoid this Pattern

Traders should avoid trading bear pennants. Decades of testing on over 1,600 trades show bearish pennants have a success rate of only 54% and a low price decrease of 6%. The evidence is clear, pattern trading bear pennants is not worthwhile.

Trading a Descending Triangle’s 87% Success Rate

Twenty years of trading research show the descending triangle pattern has an 87% success rate in bull markets and an average profit potential of +38%. The descending triangle pattern is popular because it is reliable, accurate, and generates a good average profit.

Trading the Rising Wedge Pattern’s 81% Success Rate

According to multi-year testing, the rising wedge pattern has a solid 81% success rate in bull markets with an average potential profit of +38%. The ascending wedge is a reliable, accurate pattern, and if used correctly, gives you an edge in trading.

Trade the Inverse Head & Shoulders with 89% Accuracy

The inverse head and shoulders pattern is one of the most accurate technical analysis reversal patterns, with a reliability of 89%.  It occurs when the price hits new lows on three separate occasions, with two lows forming the shoulders and the central trough forming the head.

Head & Shoulders Pattern: Trade an 81% Success Rate

The head and shoulders pattern is one of the most accurate technical analysis reversal patterns, with a reliability of 81%. A head and shoulders top occurs when the price peaks on three separate occasions, with two peaks forming the "shoulders" and the central peak forming the head.

Trading a Double Bottom Pattern’s 88% Success Rate

Decades of research reveal the double bottom pattern has an 88% success rate in bull markets and an average profit potential of +50%. The double-bottom chart pattern is one of the most reliable and accurate chart indicators for traders.

Bull Pennant: Why Traders Lose With This Pattern

Traders must be cautious when trading bull pennants. Published research reveals a low success rate of 54% and a meager price increase of 7%. This implies pattern trading bullish pennants is as good as coin-flipping with unfavorable odds.

Falling Wedge Pattern: A 74% Chance of a 38% Profit!

A falling wedge is a technical analysis pattern with a predictive accuracy of 74%. The pattern can break out up or down but is primarily considered bullish, rising 68% of the time.

Triple Bottom Pattern: Trading an 87% Success Rate

Decades of trading research show the triple-bottom pattern has an 87% success rate in bull markets and an average profit potential of +45%. The triple bottom chart pattern is popular because it is reliable and accurate and generates a good average profit for traders.

23 Best Stock Chart Patterns Proven Reliable By Data Testing

Published research shows the most reliable and profitable stock chart patterns are the inverse head and shoulders, double bottom, triple bottom, and descending triangle. Each has a proven success rate of over 85%, with an average gain of 43%.

Ascending Triangle: Trade An 83% Successful Pattern

According to two decades of trading research, the ascending triangle pattern has an outstanding 83% success rate with an average potential profit of +43%. It's a well-known, reliable, accurate pattern that can generate good profits.

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