Over the past few years I noticed that many chart patterns have been failing at an increasingly rapid rate. I wanted to see if my impression was accurate so I did my own research on some of the more common patterns, such as head and shoulders, ascending triangles, etc...
And indeed, it turns out my observations are backed up by statistics.
More interesting, however, was the fact that doing this research uncovered some unusual trading opportunities that are not yet over exploited.
Case in point, the head and shoulders top fails 60% of the time making it a real dog of a pattern to trade.
The big however is that of those break downs that fail, 71% reverse 10% higher or more, and most of the time this occurs the price breaks out to fresh new highs for serious upside gains.
If I lost you on that I apologize. Simply put fading the head and shoulders breakdown offers a very profitable contrarian trade to the upside.
Here's the research for those interested in more opportunities like this:
Bulkowski Chart Patterns Updated | Profitwaves
Are Stock Patterns Losing Their Value?
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