Chart Summit – Best Dressed Charts of 2016

Each year at about this time I publish a “Best Charts List” showcasing the outstanding examples of classical charting principles from the just-completed year.

The Best Dressed List (BDL) illustrates the types of trading situations Factor LLC seeks in its proprietary account. These types of trading situations are the main focus of Factor LLC’s trading.

Charting is a very subjective craft. Different chartists often disagree completely in the analysis of the same chart construction. What might be a bullishly biased chart to me could be just the opposite for another chartist. Importantly, each chartist needs to know what his or her own sweet spot.

The annual Best Charts List features those patterns that landed right in the middle of my sweet spot. To qualify for the Best Dressed List, a market must meet the following criteria:

1. A clearly defined (no doubt about it) classical chart pattern at least 12 weeks in duration on the daily and weekly charts in a tradable market.
2. A decisive breakout that does not put a reasonable breakout entry into serious harm. Secondary breakouts are considered when an initial earlier breakout failed.
3. An intermediate trend to the implied target, typically representing a price move of at least 10% to 20% of the underlying value. I look for patterns that typically reach their targets in a matter of weeks or months.