Yard Charts Technical Analysis Software: Top End Sweep Pattern
Pattern Overview
The Top End Sweep is a bearish reversal pattern identified by YardCharts, resembling an inverted right-angled triangle:
- Horizontal Line (Long Side): Connects two or more roughly equivalent market lows (Line 1, Picture A).
- Vertical Line (Short Side): Extends from the horizontal to the highest point above it (Line 2, Picture A).
- Hypotenuse: Connects ascending market highs, reflecting bounces above the horizontal (Line 3, Picture A).
Pattern Characteristics
- Requires at least two, ideally three, bounces with ascending highs above the horizontal line (Picture B).
- Preferably, the up-move should have more or equal bars than the down-move, indicating slower ascent than descent.
Pattern Confirmation
- The pattern is confirmed after:
- A breakdown below the horizontal with a subsequent drop to at least 50% of the vertical line's length (Trough 1, Picture B).
- A retracement close to the horizontal line, marking the sell entry point.
- A stop loss should be set just above the last bounce high or within a trader-defined percentage, considering the triangle's height and risk tolerance.
Historical Performance
YardCharts has identified 3 instances in Nasdaq and NYSE where this pattern preceded significant declines post-entry, with the market falling to at least twice the length of the vertical side without triggering a 10% stop loss above the entry point.
