Encyclopedia of Chart Patterns. Thomas N. Bulkowski

a month by definition. The table says that price drops 7% to 10% in 6 days and then returns to the breakout price in a round‐trip total of 12 days.

Table 6.4 Breakout and Post‐Breakout Statistics

Description	Bull Market	Bear Market
Breakout direction	100% down	100% down
Performance of breakouts occurring near the 12‐month low (L), middle (M), or high (H)	L –17%, M–17%, H –16%	L –23%, M –22%, H –22%
Pullback occurrence	67%	63%
Average time to pullback bottoms	–7% in 6 days	–10% in 6 days
Average time to pullback ends	12 days	12 days
Average decline for patterns with pullbacks	–16%	–20%
Average decline for patterns without pullbacks	–19%	–27%
Percentage price resumes trend	60%	55%
Performance with breakout day gap	–17%	–23%
Performance without breakout day gap	–16%	–22%
Average gap size	$0.85	$0.48

      Patterns without pullbacks perform better than do those with pullbacks. That behavior is not unique to big Ms; we've seen it in other species of chart patterns. After a pullback completes, it resumes dropping 55% to 60% of the time on average.

      Gaps. Breakout day gaps don't help or hurt performance much. Notice that the gap size in bull markets is almost twice the size of bear market gaps. Hmm. That's a surprise.

      I measured the median gap size (19 cents in bull markets and 21 cents in bear markets) and used those as the difference between tall and short gaps. I found that in bull markets, gaps taller than the median saw price drop an average of 19% after the breakout. Short gaps lost just 16%.

      In bear markets, the results were 25% decline for tall gaps and 21% decline for short gaps.

      Table 6.5 shows size statistics for the big M.

      Height. We see that regardless of the market condition (bull or bear), tall patterns outperform short ones, but not by much. To compute this, measure the height of the pattern from the highest peak to the lowest valley between the two peaks and divide the result by the price of the lowest valley. If the result is larger than the percentage shown in the table, then you have a tall big M.

Width. Width doesn't offer any helpful performance improvement, although narrow patterns' performance is slightly better (but probably statistically insignificant). Measure the width of the pattern from peak to peak and compare it to the 26‐day median. If the result exceeds the median, then you have a wide pattern.

Table 6.5 Size Statistics

Description	Bull Market	Bear Market
Tall pattern performance	–18%	–23%
Short pattern performance	–16%	–22%
Median height as a percentage of breakout price	12.4%	15.1%
Narrow pattern performance	–17%	–23%
Wide pattern performance	–16%	–22%
Median width	26 days	26 days
Short and narrow performance	–16%	–22%
Short and wide performance	–15%	–22%
Tall and wide performance	–18%	–22%
Tall and narrow performance	–18%	–24%

      Height and width combinations. Upward breakouts show better performance if the big M is tall (regardless of width). Tall and narrow patterns outperform in bear markets.

      Table 6.6 shows that volume doesn't play a key role in performance of big Ms.

      Volume trend. Volume trends downward every two out of three trades on average.

      Rising/Falling volume. There's no performance difference between big Ms with a rising or falling volume trend (as measured from peak to peak using linear regression).

Breakout day volume. Only bear markets show better performance after heavy breakout volume. Heavy breakout volume typically leads to better performance for other chart patterns (not so much with downward breakouts, though, so it's weird that big Ms are different).

Table 6.6 Volume Statistics

Description	Bull Market	Bear Market
Volume trend	67% down	68% down
Rising volume trend performance	–17%	–22%
Falling volume trend performance	–17%	–22%
Heavy breakout volume performance	–17%	–23%
Light breakout volume performance	–17%	–20%