Prices move down (first leg), retrace (corrective phase), and then move down again (second leg). The two down legs are nearly equal in both price and time. During the legs prices decline rapidly in a straight-line fashion. During the corrective phase prices can move horizontally but usually rise.
Percent of successful formations – 88%
Failure rate – 22%
Average time to throwback completion – 4-5 hrs
Compute the length of the first leg from the highest high to the lowest low. Subtract the result from the highest high reached in the corrective phase to get the target price. For a more conservative target, use two-thirds of the first leg height.