Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 89

Table 7.1 shows identification guidelines for the big W and refer to Figure 7.2 for guidance.

Appearance. The big W is a form of double bottom, one with a tall left side, and if the pattern works as it's supposed to, a tall right side as well. The two valleys should bottom near the same price (use your best judgment as to how close the bottoms need to be to each other). Often the bottom‐to‐bottom variation is small (the median is 14 cents).

Table 7.1 Identification Guidelines

Characteristic	Discussion
Appearance	Price forms twin bottoms at or near the same price with an unusually tall left side. A well‐formed pattern should remind you of a big W (that is, if price on the right side rises to match the left).
Price trend	Downward, leading to the first bottom. Look for a long, steep drop often at least the height of the pattern (from the lower of the two valleys to the peak between the valleys) above the top of the pattern. See text.
Volume	Downward the majority of the time, but don't exclude a big W with a rising volume trend.
Breakout direction, confirmation	To break out, price has to close above the peak between the two bottoms, confirming the pattern as valid. Without an upward breakout, you don't have a big W.
Duration	No minimum duration and the longest pattern I studied is about 9 months wide.

Figure 7.2 Price at F almost returns to the launch price, A.

Price trend. The downtrend from A to B is a steep drop like that shown in the figure. You want to avoid patterns that see price meander or even move sideways as the drop approaches B. If price takes its time reaching the first bottom, then the chart pattern is probably a double bottom (see one of the Adam & Eve varieties).

Eyeball the height from the center peak between the two bottoms to the lower of the two bottoms. Then make sure the left side of the pattern is at least that height above the central peak.

For example, the height of the big W is the high price at point C minus the low at B. The left side must be at least this height above C. In this case, the downtrend begins at A, which is well above C, so the downtrend from A to B is tall enough. A tall left side is what separates big Ws from double bottoms. A big W is a type of double bottom, but few double bottoms are big Ws. I hope that makes cents (sense).

Volume. Don't disqualify a big W because of its volume trend. However, most of the time, you'll see volume trending lower from valley B to D. Linear regression on the big W shown in the figure says volume slopes upward. It doesn't look like it does, but the numbers say otherwise. I show the upward trend at H.

Breakout direction, confirmation. Price always breaks out upward from a big W. If it doesn't, then you don't have a big W. A breakout occurs when price closes above the hill between the two bottoms. In Figure 7.2, that would be a close above C, which I show as a horizontal line at E.

Price confirms the big W as a valid chart pattern when it closes above C. Again, if you don't have confirmation, then you don't have a big W.

Duration. I did not set a minimum or maximum width between the two valleys. They ranged from a very narrow 4 days to 260 days. I looked at the 4‐day pattern, and it looks fine.