Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 107

Figure 8.4 shows a typical broadening bottom failure. Price trended down from the March high. On 19 March (E), the company announced the pricing of a secondary public offering of nearly 8 million shares of common stock. The stock price took a hit and shares tumbled that day and the next, just before the start of the broadening bottom.

The broadening bottom formed innocently enough with price swinging from low to high (A). Price touched the top trendline three times and the bottom trendline three times, as one would expect in a well‐behaved broadening bottom (meaning at least 5 touches).

Figure 8.4 This broadening bottom breaks out downward, reverses, and busts the downward breakout.

At B, the stock broke out downward from the broadening pattern when price closed below the lower trendline. Because price trended downward going into the pattern, a trader might expect a downward breakout, too (so the pattern acted as a continuation of the downward price trend). Indeed, they might expect price to drop back to just above the December 2018 low (F).

However, the stock surprised traders when it stalled at C. It was even more of a shock when the stock began to stair‐step higher and closed above the top of the pattern at D. At D, the stock busted the downward breakout. After that, the stock was an airline taking off and flying into the clouds.

The behavior of the broadening pattern shown in the figure represents what I call a 5% failure. Price breaks out lower but fails to continue moving in the breakout direction by more than 5% before heading back up. The reverse is also true for upward 5% failures: Price climbs after an upward breakout by no more than 5% before tumbling.