Most Profitable Chart Patterns

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According to Thomas Bulkowski, the best performing and also most likely to be profitable chart patterns are: bullish flags that are high and tight that breakout to the upside and complex head and shoulders top chart patterns with breakouts to the downside. His picks are based on his exhaustive research and backtesting price action on chart patterns.

High and tight bull flag chart facts:

The high tight bull flag is a version of the standard bull flag that requires a much stronger trend and a tighter price base for the flag.

It is a continuation pattern of the previous uptrend before the flag.

Price should rise at least 90% or double in the 2 months or less before the flag price range forms.

A consolidation price range pattern forms after the large uptrend. The price range can look like a flag or a pennant or just a pause a base in the rising price

Volume should decline as the price range in the flag forms.

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The ‘pole’ is represented by the previous uptrend in price before a price consolidation.

The ‘flag’ is a rectangular descending price range after the uptrend to new higher prices stops.

The flag has primarily lower highs and lower lows.

The signal of the end of the flag pattern and the beginning of a new potential uptrend is when the descending upper trend line is broken with a move upwards in price.

This pattern is thought to be the consolidation of the uptrend.

Traditionally the move out of the flag is thought to be potentially as big in magnitude as the uptrend before the flag begins.

The completed pattern is validated when price closes above the highest price in the pattern, which is almost always the peak of the flag. A breakout of the flag with higher than normal volume increases the chance of a continuation of the uptrend.

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A stop loss can be set at the lower trend line in the flag after entry.

Of course this pattern does not work every time but when it does it can set up a huge win, but with all set ups much of the edge comes from creating a good risk reward ratio through an initial stop loss to manage risk and a trailing stop to maximize a gain.

Complex head and shoulders top chart pattern facts:

The complex head and shoulders top chart pattern is a variation on the traditional head and shoulders as it can have multiple shoulders or heads during the formation.

It is a reversal pattern of an uptrend. The pattern is formed during a bull market or a chart in an uptrend and the completion of this pattern is bearish and is usually a set up for a pullback, correction, or bear market. A previous uptrend must be in place before this pattern can be considered valid.

A complex head and shoulders top can form multiple shoulders or multiple heads, but almost never both.

Multiple shoulders should have tops ne