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Visual Guide to Chart Patterns by Thomas N. Bulkowski

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Failures

Chart patterns fail and they do so much too often. This chapter shows what some of those failures look like and gives hints on how to avoid them. The first hint is to buy stocks that only go up. If you can do that, then you do not need to read the rest of this chapter, and you can retire at 36 as I did.

Triangle Failures

For the rest of you mere mortals, imagine that you have a buy stop a penny above the top of the ascending triangle shown in Exhibit 19.1.

Price breaks out upward at A, and you are overjoyed at getting in on the ground floor of an advance.

Then, just three days later, your mood changes when price drops and busts the ...

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