THE HAndbook oF TEcHnIcAl AnAlysIsFigure 15.33 A Basic Three‐Box Reversal Bearish Triangle Breakout on a Point‐and‐
Figure Chart of CraiLar Technologies Inc.
Courtesy of Stockcharts.com
double top. Once the double top is breached, the catapult pattern is complete. The
exact opposite applies for bearish catapults. This pattern is regarded as extremely
bullish, as the market participants continue to drive demand even after a failed
triple top breakout. Traders would normally initiate a partial entry at the breach
of the triple top and enter the remaining positions at the breach of the subsequent
double top. Stoploss orders are usually placed below the lowest X in the breakout
column. See Figure 15.34 for an illustration of a bullish catapult formation.
Figure 15.35 is an example of a bullish catapult in CNO Financial Group Inc.
See Figure 15.36 for an illustration of a bearish catapult formation.
Figure 15.37 is an example of two consecutive bearish catapults unfolding in
Oclaro Inc.
broadening Formations
Broadening formations indicate confusion and potential volatility in the markets.
They are a reflection of the market participants’ heightened emotional involvement
and response in the markets. The pattern expands, making higher and lower boxes