Stocks & Commodities V. 22:4 (44-48): Tiny Chart Patterns: Stinkers Or Stalwarts? by Thomas N. Bulkowski
Recognizing tiny chart patterns may be all the edge you need to make a killing in the market, but do they work?
In two prior articles, I discussed bullish chart patterns of long duration. This article discusses smaller chart patterns: some you may have heard about, and some
that may be new to you. None of the patterns is longer than a few days. Daytraders in stocks or commodities
may find them useful, but some of the patterns may also help longer term investors. Sometimes these tiny
patterns can tip you off to a large move ahead. They can signal a trend reversal and save you a ton of money.
So what are these mysterious chart patterns?
All figures in this article show high- low- close prices — that is, no opening price. Figure 1 illustrates our first
pattern, inside days, on the daily scale. Look at the inset for a closer view of the pattern. An inside day is
within the boundary of the prior day’s range (hence its name). The second day has a lower high and higher low — a narrowing of the price range. No ties are allowed (the two days cannot share the same high or low price). Where the stock opens or closes is not important, and the second day need not be centered in the first day’s price range. The inset shows the second
day’s price range to be above the midpoint of the prior day.