Study · Chart patterns

Do chart patterns predict stock returns?

Measured Sep 24, 2026 · outcomes through Aug 21, 2026

The short answer

Not on their own. Across 1,354,468 weekly-sampled detections of 15 chart patterns on US stocks since 1995, a stock showing a pattern went on to beat the median stock over the next month 47 to 51 times in 100 — the range a coin flip produces. How often a pattern reaches its drawn target depends mostly on how far away the target is.

Each pattern against a coin flip

For every bullish pattern, how often the stock beat the median stock over the next month (21 trading sessions); for every bearish pattern, how often it trailed it. The dashed line is chance. The bar around each square is the 95% interval, clustered by date, because stocks that show a pattern on the same day move together.

Bullish patterns — share that beat the median stock over a month
4045chance 505560rectangle51 · n 10.3Kwedge falling51 · n 28.9Kbull flag51 · n 26.9Ktriple bottom50 · n 319.6Kdouble bottom50 · n 116Kascending triangle50 · n 120.6Ksymmetrical triangle50 · n 19.3Krounding bottom48 · n 55.2K
Bearish patterns — share that trailed the median stock over a month
4045chance 505560rectangle51 · n 5.3Ktriple top50 · n 348.2Ksymmetrical triangle50 · n 15Khead shoulders50 · n 19.9Kdouble top50 · n 118.9Kdescending triangle49 · n 58.3Kwedge rising49 · n 27.1Krounding top49 · n 46.8Kbear flag47 · n 18.3K

How often the drawn target is reached — and why

A pattern draws a target and a stop. Across all bullish patterns, 20 in 100 reached the target before the stop within 21 sessions; the typical hit took 9 sessions. Whether the target is reached depends mostly on how far away it is and how far along the pattern already is — geometry, not a forecast.

Bullish patterns that reached their target, by distance to it
target under 5% away6 sessions to the target, median58target 5–15% away12 sessions to the target, median21target 15% or more away14 sessions to the target, median5
Bullish patterns that reached their target, by stage
confirmed (price broke out)7 sessions to the target, median40still forming12 sessions to the target, median20broken (failed)14 sessions to the target, median5
bull flag
17 of 100 bull flags reached their drawn target within 21 sessions
51 of 100 bull flags beat the median stock over the next month

Does anything make a pattern work?

We split every pattern by volume confirmation, confidence, reward-to-risk, distance to target, false-break risk, trend alignment, market volatility and age. In none of those splits did the pattern beat the median stock over the next month by a margin that held up across years (every t-statistic below 3).

The one measured effect runs the other way

Over the next week, two patterns went against their own call: 48 in 100 rounding bottoms beat the median stock, and 48 in 100 rounding tops trailed it. Both fit the market's strongest short-term relation — recent winners give some back.

Short-term reversal: the strongest relation we measured

How this was measured

Every Wednesday since 1995, the stocks in our universe are compared on the signal and followed for 1, 5, 21 and 63 trading sessions. A reading counts when the stock beat the median stock on the same day, so chance is always 50 in 100 and a market-wide rally cannot flatter the result. The strength of a relation is a rank correlation (IC) between the signal and the forward return; its t-statistic is taken on non-overlapping dates, and a relation is called proven only when |t| is at least 3, it held in at least 60% of years and it is large enough to matter. With hundreds of tests, a looser bar would pass about one in twenty by luck. Studies run Sep 24, 2026; outcomes measured through Aug 21, 2026.

Research, not advice. A measured tendency across hundreds of stocks is a nudge for any one of them, never a forecast of its price.

Questions

Do chart patterns work?
Measured against the median stock on the same day, not on their own. None of 15 common patterns beat a coin flip over the next month on US stocks since 1995. How often a pattern reaches its target depends mostly on how far away the target is.
Do bull flags work?
51 in 100 bull flags beat the median stock over the next month, and 17 in 100 reached their drawn target within 21 sessions. That is no measurable edge.
Does volume confirmation make chart patterns more reliable?
Not in this data. Bullish patterns on volume at least 1.5 times normal reached their target 16 times in 100, against 23 on below-normal volume, and neither group beat the median stock afterwards.
How long does a chart pattern take to reach its target?
When a bullish pattern reached its target, it took 9 sessions at the median, and a quarter took 15 or more. Many never do: 80 in 100 hit the stop or ran out of time first.
Is a confirmed breakout more reliable?
Confirmed patterns reached their target 40 times in 100, against 20 for patterns still forming — mostly because the target is closer once price has broken out. Over the next month they did no better than the median stock.

More evidence

RSI, MACD and indicatorsDo RSI, MACD and other indicators predict returns?Short-term reversalDo stocks that just jumped keep winning?Volume and liquidityDoes trading volume or liquidity predict stock returns?Short interestDoes short interest predict stock returns?Insiders and analystsDo insider buys or analyst revisions predict stock returns?Signals without an edgeWhich popular stock signals don't predict returns?
All studies

References

  • Lo, A. W., Mamaysky, H. and Wang, J. (2000). Foundations of Technical Analysis. Journal of Finance 55(4).
  • Bulkowski, T. N. (2021). Encyclopedia of Chart Patterns, 3rd ed. Wiley.
  • Harvey, C. R., Liu, Y. and Zhu, H. (2016). …and the Cross-Section of Expected Returns. Review of Financial Studies 29(1).