According to Bukowski’s pattern site the right-angled and ascending broadening chart pattern is not one you should consider trading.
Many other chart patterns perform much better. Downward breakouts have a large break even failure rate which should disqualify them from your trading arsenal. Upward breakouts have only a middling average rise, and that’s if you trade them perfectly.
Broadening Formations, Right-Angled and Ascending: Identification Guidelines
|Price trend||Can be up (66% have a rising price trend) or down (34%) leading to the pattern.|
|Shape||A megaphone tilted up with the bottom horizontal.|
|Trendlines||The bottom trendline is horizontal, the top one slopes upward.|
|Touches||At least two peaks and two valleys should touch their respective trendline.|
|Volume||Trends upward 54% of the time and downward 46% of the time.|
|Breakout||Downward 66% of the time.|
SPX,W Broadening Formation, Right-Angled and Ascending
Bonus: From zero hedge
In turn, this means that every push higher in yield, whether orchestrated by central banks, or due to exogenous events like a “taper tantrum” risks upsetting this precariously compressed ERP “spring”, leading to a violent market crash. Because if the ERP is responsible for 92% of the S&P500 move since 2012, or just over 800 points, that would suggest that central bank policies are directly responsible for approximately 40% of the “value” in the market, and any moves to undo this support could result in crash that wipes out said ERP contribution, leaving the S&P500 somewhere in the vicinity of 1,400.
In retrospect, it becomes obvious why the Federal Reserve is petrified about even the smallest, 25bps rate hike.