Broadening Tops Breakout Direction and Average Gains and Declines

    

Prices breakout above resistance about half the time and below support the other half of the time; when prices breakout above resistance (triggering a buy signal), prices have an averaged maximum gain of 29% before any correction of 20% or more; when prices breakout below support (triggering a sell signal), prices have an averaged maximum decline of 15% before a counter-breakout trend 20% correction (Bulkowski, 2005). Note that Bulkowski (2005) suggests another set of buy and sell signals, namely that a trader should buy the third successful touch of support and sell at the third successful touch of resistance.