working through a great book called Technical Analysis by Kirkpatrick and Dahlquist (2006). not a very original title, but a solid book cover much of the spectrum of TA in a thorough manner, and makes for an excellent study or reference book. quite pricey though, so be warned.about R600 at Exclusive Books
of particular current interest is the chapter on formations that includes results from Thomas N. Bukolwski's study. he observed over 700 stocks over a period of 10 years, and catalogued their results. "Although his analysis pattern was, of course, subject to his potential bias, it was consistent and included a significantly large number of examples."
an interesting example, is that a double top formation is statistically very poor and the odds of making a profit are below even.
for your interest, the most profitable pattern results with least risk bullish formations (of those covered in the chapter, i presume) were are follows:
Formation; Perf vs S&P500; Failure to reach 10% Gain after breakout; Perc Gain over 50%; Perc Reach Price Target; Perc Throwback; Most favourable Vol during formation; Increasing Vol on Breakout 1. Descending triangle breaking up; 29%; 9%; 34%; 67%; 29%; Rising; Irrelevant 2. Declining Wedge; 25%; 2%;---; 88%; 47%; ---; --- 3. Head and Shoulders Bottom; 25%; 12%; 26%; 83%; 40%; Declining; Desirable 4. Symmetrical Triangle, Breaking Up; 25%; 15%; 28%; 79-81%; 51%; Irrelevant; Desirable
hope you enjoyed the read. will try pop on some other interesting sections some time. try scan the book in exclusive books or online, i recommend it.
Formation Perf vs S&P500 Failure to reach 10% Gain after breakout Perc Gain over 50% Perc Reach Price Target Perc Throwback Most favourable Vol during formation Increasing Vol on Breakout 1. Descending triangle 29% 9% 34% 67% 29% Rising Irrelevant 2. Declining Wedge 25% 2% --- 83% 47% --- --- 3. Head and Shoulders Bottom 25% 12% 26% 88% 40% Declining Desirable 4. Symmetrical Triangle, Breaking Up 25% 15% 28% 79-81% 51% Irrelevant Desirable