As of 02/12/2024 Indus: 38,797 +125.69+0.3% Trans: 16,210 -5.040.0% Utils: 845 +10.29+1.2% Nasdaq: 15,943 -48.12-0.3% S&P 500: 5,022 -4.77-0.1% | YTD +2.9% +2.0% -4.2% +6.2% +5.3% | TargetsOverview:01/30/2024  39,000 or 37,500 by 02/15/2024
16,400 or 15,400 by 02/15/2024 885 or 830 by 02/15/2024 16,400 or 15,500 by 03/01/2024 5,100 or 4,800 by 02/15/2024 |
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As of 02/12/2024 Indus: 38,797 +125.69+0.3% Trans: 16,210 -5.040.0% Utils: 845 +10.29+1.2% Nasdaq: 15,943 -48.12-0.3% S&P 500: 5,022 -4.77-0.1% | YTD +2.9% +2.0% -4.2% +6.2% +5.3% |
TargetsOverview:01/30/2024 39,000 or 37,500 by 02/15/2024 16,400 or 15,400 by 02/15/2024 885 or 830 by 02/15/2024 16,400 or 15,500 by 03/01/2024 5,100 or 4,800 by 02/15/2024 |
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My book,Getting Started in Chart Patterns, Second Edition,pictured on the left, discusses partial rises and declines starting on page 207.
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-- Tom Bulkowski
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This article discusses how to predict the breakout direction from some chart patterns.
With some chart patterns, determining the breakout direction is easier than with other chart patterns. Let's take a look at broadening tops.
The chart of Apple Computer (AAPL) shows a broadening top chart pattern. There are a number of identification guidelines that help with identification. They are:
- Price should trend up leading to the start of the pattern (if it trends downward, it's a broadening bottom).
- The shape of the pattern should resemble a megaphone with the smaller end toward the left, wider to the right.
- Price follows two diverging trendlines, one along the peaks and another along the valleys.
- Price should touch each trendline at least twice.
- Look for partial rises and declines.
The chart shows a partial decline. Once the broadening top has passed the identification guidelines (meaning only begin looking for a partial rise or decline afterpoint 2 in this case, since bottoms 4, 5, and 6 were made earlier) then watch for price to drop from the top trendline but not make it down to the lower trendline. In broadening tops,these partial decline correctly predict an immediate upward breakout 72% of the time.
In this example, the breakout was not immediate as the partial decline predicted, even though it correctly signaled an upward breakout. It took another move down before price recoveredand broke out upward.
You can review the links for more information on these pre-breakout features. You will find partial rises and declines helpful in all varieties of broadening patterns as well asrectangles and even triangles.
The following patterns show partial rises and declines
-- Thomas Bulkowski
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FAQs
A popular method for modeling and predicting the stock market is technical analysis, which is a method based on historical data from the market, primarily price and volume.
What is the best indicator to predict a stock breakout? ›
Indicators such as Moving Averages, RSI and MACD can be used to measure the strength of the breakout. Volume: An important factor to identify a breakout is the trading volumes of the stock.
How to predict breakouts? ›
Monitor volume and price
One way to identify potential breakout stocks is by looking for those with increasing volume and price momentum. Breakout stocks often have a sudden surge in trading volume, which may indicate growing investor interest.
What is the most accurate breakout indicator? ›
Bollinger Bands: Bollinger bands are an indicator of volatility that can confirm breakouts. By putting Bollinger bands on a chart, traders can see how volatile the trend is and know that a breakout has happened when the price breaks above or below the Bollinger bands.
What is the most accurate stock predictor? ›
1. AltIndex – Overall Most Accurate Stock Predictor with Claimed 72% Win Rate. From our research, AltIndex is the most accurate stock predictor to consider today. Unlike other predictor services, AltIndex doesn't rely on manual research or analysis.
What is the formula for predicting stocks? ›
2.4 Future PE-EPS Method
This method of predicting future price of a stock is based on a basic formula. The formula is shown above (P/E x EPS = Price). According to this formula, if we can accurately predict a stock's future P/E and EPS, we will know its accurate future price.
What is the best algorithm for stock prediction? ›
Which machine learning algorithm is best for stock prediction? A. LSTM (Long Short-term Memory) is one of the extremely powerful algorithms for time series. It can catch historical trend patterns & predict future values with high accuracy.
Which indicator to use for breakout? ›
Relative Strength Index (RSI)
RSI is another momentum indicator that is useful for confirming reversal breakouts. Basically, this indicator tells us the changes between higher and lower closing prices for a given period of time.
What tool is used to find breakout stocks? ›
You can also use Bollinger Bands, which are a technical indicator for trading strategies, to help identify breakout stocks. On a candlestick chart, Bollinger Bands move with the price, forming an envelope around it.
How do you know if a stock is going to breakout? ›
Technical chart patterns like head and shoulders, triangles, and flags that are nearing completion and indicate higher price moves are also typical breakout targets. A price breakout generally occurs when price action makes a last swing to confirm the pattern.
The price will often move just beyond resistance or support, luring in breakout traders. The price then reverses and doesn't continue moving in the breakout direction. This can happen multiple times before a real breakout occurs. Support and resistance levels are also subjective.
Which breakout pattern is best? ›
1. Ascending triangle. The ascending triangle is a bullish 'continuation' chart pattern that signifies a breakout is likely where the triangle lines converge.
How to see a breakout before it really happens? ›
Observe daily chart for additional patterns. A descending channel should be traded mostly for breakouts, otherwise avoid them. Volume at the breakout should be more than the volume of previous candles.
How can we predict the direction of reaction? ›
By knowing the values of the equilibrium constant and the reaction quotient of a chemical reaction, the direction of the reaction can be predicted. When the reactants and products are gases, the direction is from vapour density measurements of the gases.
How to confirm trend direction? ›
It is done by connecting a series of highs and lows. If you can connect low points sloping up, you have an uptrend. Similarly, if you can connect a series of chart high points sloping down, you have a downtrend. Volatile versus lackluster trends are both types of flat trends or what we call a directionless market.
How do you find the breakout pattern? ›
Common trading strategies for a breakout pattern include trend-following strategies, where traders enter positions in the direction of the breakout after confirmation; pullback strategies, where traders wait for a retest of the breakout level before entering a trade; and momentum strategies, where traders enter as soon ...
39,000 or 37,500 by 02/15/2024
on 2/7/24
,pictured on the left, discusses partial rises and declines starting on page 207.
