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Pipe Bottom Stats Revisited…


Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P500 (^GSPC):

As of 12/03/2018

25,826 287.97 1.1%

10,850 30.24 0.3%

749 6.64 0.9%

7,442 110.97 1.5%

2,790 30.20 1.1%

YTD

4.5%

2.2%

3.5%

7.8%

4.4%

26,200 or 24,300 by 12/15/2018
11,200 or 10,100 by 12/15/2018
765 or 730 by 12/15/2018
7,800 or 7,200 by 12/15/2018
2,875 or 2,700 by 12/15/2018

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

Statistics updated on 11/30/2018.

For more information on this pattern, read
Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book.,
pictured on the right, pages 536 to 549.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. — Tom Bulkowski

$ $ $

Pipe bottoms are excellent performers in a bull market. They
have a modest break even failure rate and high average rise. The bad news is that they appear on the weekly scale, so the
delay buying in can be costly. Nevertheless, you should wait for confirmation before trading this and other chart
patterns. Discovered by Thomas Bulkowski in 1998.

 

Pipe Bottom Important Bull Market Results

Overall performance rank (1 is best):Not ranked

Break even failure rate: 8%

Average rise: 54%

Throwback rate: 26%

Percentage meeting price target: 77%

The above numbers are based on more than 8,800 perfect trades. See the glossary for definitions.

Pipe Bottom Identification Guidelines

Characteristic Discussion
Weekly chart Pipes appear on the daily scale but the ones on the weekly charts perform better. Use the weekly chart.
Price trend Usually downward leading to the pattern.
Shape Twin and adjacent downward spikes. On a bar chart, the two price bars look like spikes. On a candlestick chart, the candles can be any shape (from doji to Marubozu).
In other words, don’t let the term spike mislead you.
Overlap The 2 weeks often have a large price overlap but need not bottom at the same price. The median bottom price variation is 19 cents.
Volume Most pipes show above average volume on one or both spikes.
Obvious The pipe should stand-alone and be obvious on the chart. The spike should clear the surrounding price action.
Downtrends The best performing pipes appear at the end of downtrends.
Confirmation The pattern confirms (becomes a valid pattern) when price closes above the highest high in the pattern.

Pipe Bottom Trading Tips

Trading Tactic Explanation
Measure rule Compute the height from the taller of the two spikes
to the lower of the two (the AB distance in the
Measure Rule figure to the right) then multiply by the above ‘percentage meeting price target.’ Add the difference to the higher of the two (A) to get a price target,
C.
Buy Buy when price closes above the higher of the two spikes. I show that as A in the Measure Rule figure to the right.
Trends Pipes with a short-term (up to 3 months) downtrend leading to the pipe perform best.
Uneven lows Pipes with uneven lows tend to perform better than do those with spikes that bottom at the same price. The Spike figure shows an example
of spikes with uneven lows (spike B is lower than spike A).
Yearly low Pipes within a third of the yearly low perform best.
Volume Heavy left spike volume when compared to the right suggests better performance.
Stop If price closes below the lower of the two spikes, then close out your position.
Pipe bottom measure rule

The Measure Rule

Pipe bottom spike

Spike

Pipe Bottom Example

Pipe bottom chart pattern example

The above figure shows an example of a pipe bottom chart pattern. This pipe bottom appears as part of a retrace in an uptrend,
signaling higher prices ahead. The retrace begins at A and bottoms at the pipe then price
begins its recovery. Shown on the weekly scale.

— Thomas Bulkowski

Other Pipe Bottom Examples

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.
You have a drinking problem if every night you’re beginning to find your roommates’s cat more and more attractive.


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