{"id":108,"date":"2025-06-14T14:21:19","date_gmt":"2025-06-14T14:21:19","guid":{"rendered":"https:\/\/50yeartrader.com\/blog\/?p=108"},"modified":"2026-09-30T21:26:28","modified_gmt":"2026-09-30T21:26:28","slug":"reverse-pigtail-chart-formation-goodman","status":"publish","type":"post","link":"https:\/\/50yeartrader.com\/blog\/reverse-pigtail-chart-formation-goodman\/","title":{"rendered":"Reverse Pigtail: Charlie’s Lesson on Chart Formations"},"content":{"rendered":"\n

I discovered the Reverse Pigtail formation (RPT) about two years ago while ghost trading late at night. It is not particularly common, but it does seem to have the percentages in its favor, with a yummy risk-reward ratio. It seems best on Buy formations and shorter-term bars, 5-minute and 15-minute.<\/p>\n\n\n\n

But before I show it to you, let me talk a little about how Charlie viewed chart formations, really the more important topic!<\/p>\n\n\n\n

The Buyer-Seller Tug-of-War<\/h2>\n\n\n\n

I noticed early on that Charlie would see a chart formation quickly, almost instantly, but I would not really recognize it as such. This bothered me (perhaps I had some visual deficiency) until I understood how he thought of such things. Once I discovered that, I became much better at spotting them on the charts!<\/p>\n\n\n\n

I also noticed early that in examining a chart Charlie would move a finger slowly along the chart, bar by bar. I believe he was walking through the buyer-seller action in his mind. Occasionally he would lift the finger slightly and then slap it back down on the chart. Charlie thought of everything in terms of the buyer-seller tug-of-war. What this means for identifying chart formations is very important:<\/p>\n\n\n\n

A formation may not look perfect visually, but the appropriate buyer-seller action is fully present in it. For example, a Pennant (an old classic chart formation) may not look exactly like a pennant, but the buyer-seller action is still present.<\/p><\/blockquote>\n\n\n\n

There is an excellent old book on classic chart formations describing them (somewhat) in buyer-seller struggle terms. It was one of the first trading books I read. Alas, discounting has made the classic formations such as head-and-shoulders quite rare; basically, the market discounts the right shoulder and it never forms. BUT if you think in terms of buyer-seller, you may well find one others do not see, because they are looking for the visual formation, not the buyer-seller action. Anyway, the book is How Charts Can Help You in the Stock Market<\/em> by William Jiler.<\/p>\n\n\n\n

Charlie says: “Look for the buyer-seller struggle, not the pretty little chart formation, and you will find gold and silver where others see only dirt and rock!” It’s true. This is a skill which must be developed, and it will require a slower, more careful and proactive examination of a chart. You must find Waldo; he’s not always going to jump out at you. Again, it is the buyer-seller action that creates the formation. It doesn’t always look exactly like its name!<\/p>\n\n\n\n

SIDEBAR: Charlie was always interested in the Higher-Lower aspects of BPs and EPs in Setups. I believe this also ties in to his understanding of the buyer-seller paradigm. I wrote an earlier post about this, A Trader’s Bucket List<\/em>.<\/p>\n\n\n\n

“There’s a lot going on in those charts, dad!” Charlie reminded me many times.<\/p>\n\n\n\n

Reverse Pigtail Examples<\/h2>\n\n\n\n

First, here is a very clean and pretty Reverse Pigtail, albeit with a short Jumbo:<\/p>\n\n\n\n

\"Reverse
A clean Reverse Pigtail with a short Jumbo.<\/figcaption><\/figure>\n\n\n\n
\"Second
This is also a Reverse Pigtail.<\/figcaption><\/figure>\n\n\n\n
\"Third
And so are these.<\/figcaption><\/figure>\n\n\n\n
\"Fourth
Another Reverse Pigtail.<\/figcaption><\/figure>\n\n\n\n
\"Fifth
Another Reverse Pigtail.<\/figcaption><\/figure>\n\n\n\n
\"Sixth
Another Reverse Pigtail.<\/figcaption><\/figure>\n\n\n\n

Buy RPTs greatly outnumber Sell RPTs. I assume this is because the volatility at tops makes the required action of sharply shorter bars less likely.<\/p>\n\n\n\n

The Buyer-Seller Action That Defines a Buy RPT<\/h2>\n\n\n\n

Here is the buyer-seller action defining Buy RPTs:<\/p>\n\n\n\n