Prices peak, retrace, and then curve around to form a higher peak. The price pattern looks like the letter “J”.
Percent of successful formations – 71%
Failure rate – 25%
Average time to throwback completion – 2-3 hrs
Compute the height of the scallop by taking the difference between the right-edge high to the lowest low in the formation. Add the difference to the highest right- edge high. The result is the minimum expected price target.