Ascending and Inverted Scallops Chart Pattern
- Ascending and inverted scallops pattern is observed during a bullish rally or at the start of the bullish rally.
- This pattern appears to be in the shape of J, rotated by 180 degrees.
- There is a straight rise in the price at the start of the pattern, forms a rounded peak and drops by a small amount, forming an inverted and backward J shape.
- There is an upward breakout most of the time, indicating a trend continual. The end of the pattern retraces ~50% of the upward move.
- The pattern is confirmed when the price rises above the highest high of the pattern.
- Compute the height difference between the highest high and the low of the pattern. Multiply it with the percentage meeting price target, which is ~64% for upward breakout.
- Add the aggregate value to the highest peak to get the upward breakout price target.
- If the price falls below the scallop, traders can initiate their short positions and the stop price would be the lowest price at the end of the scallop.
- If the price crosses the highest high of the pattern, traders can initiate their long position.
- Few swing traders enter the market by initiating their long position at the end of the scallop and exit the trade when price crosses the highest high of the pattern.
- If the volume at the breakout point is high, the pattern performs much better.
