Scallops, Ascending and Inverted

Core idea

An ascending and inverted scallop looks like a backward, upside-down J: price rises sharply from a left low, rounds over at a domed top, then retraces partway down to a higher right low. The pattern appears predominantly in rising price trends and breaks out upward more than 90% of the time — making it one of the most directionally reliable continuation patterns in the catalogue.

Bulkowski tracked 2,191 patterns. The bull-market upward breakout averages a 45% rise, with a 9% breakeven failure rate (ranks 7th of bullish patterns). Bear markets produce a 28% rise (ranks 4th by failure rate). The pattern's reliability stems from its structural completeness — there's a tall left side that confirms the trend, a domed top that signals consolidation, and an asymmetric retrace that leaves the right low well above the left.

Bulkowski's framing: I thought it showed great promise and studied it briefly before setting it aside. This topic takes a closer look at the pattern's performance — and it earns its place: low failure rate, high reliability, predictable retracement geometry.

Why it matters

Where the standard ascending scallop has a bowl-shaped bottom, the inverted version has a domed top — the same J idea flipped. Both appear in uptrends and both signal continuation, but the inverted variant offers a different entry structure: traders can buy at the right-low retrace (with structure-defined risk) rather than waiting for a breakout above a rim. That makes the inverted scallop the active swing trader's favourite scallop variant.

The 54% retrace rule

The average retrace from the dome top (B) down to the right low (C) measures 54% of the rise from the left low (A) to the dome top (B). That retrace amount varies widely, but in no case can C drop below A — if it does, the pattern is invalid. The 54% median is useful as a quality filter: retraces in the 40–60% range are textbook; shallower than 30% suggests the pattern hasn't completed; deeper than 70% raises the failure odds.

Width contraction as exhaustion signal

Like standard ascending scallops, the inverted variant in series will contract as the uptrend ages. Three consecutive inverted scallops where each is narrower than the prior is a structural warning that the trend is rolling over. Use the same series-rule discipline as for standard scallops.

Key takeaways

Mental model

Copy sourceZoom

Practical application

Example

A consumer-discretionary stock in a year-long uptrend rises from $45 to $50 (point A is the prior swing low at $45.20). Over the next ten weeks, the stock advances sharply to a domed top at $62 (point B). The dome forms over three weeks with a smooth rounded peak, no pointed tops.

The stock then retraces in a gentle slope back to $54 (point C) over the next month. The B-to-C retrace measures $8 against the A-to-B rise of $16.80 — a 48% retrace, right in the textbook range. C ($54) is well above A ($45.20), confirming the pattern structure.

An aggressive trader buys at $54.50 as the retrace stabilises, with a stop at $44.80 just below A. Risk: $9.70 per share. A conservative trader waits for the breakout above the dome top.

Three weeks later, the stock closes at $63.20 — above the $62 dome top — on volume above the pattern's average. The conservative trader fills at $62.50 with a stop at $53.50 (just below C). Risk: $9.00 per share.

Twelve days after the breakout, the stock retraces to $61.80 — a textbook throwback — then bounces. The aggressive trader holds; the conservative trader holds. Over the next eight months, the stock rallies to $86, a 38% gain from the breakout (close to the 45% bull-market median for inverted ascending scallops).

The aggressive trader exits part of the position at $78 (a +43% gain on the C-low entry) and trails the rest, eventually exiting at $82.50. Blended P&L: roughly $27 of upside on $9.70 of risk — about 2.8-to-1, materially better than the conservative trader's 2.2-to-1 from the breakout entry. Both trades worked; the structural entry at C was the better trade for the same pattern.

Related lessons