Schabacker catalogued the patterns; his successors made them a discipline. In 1948 Robert Edwards and John Magee published «Technical Analysis of Stock Trends» — still in print after eleven editions, the reference on every chartist's desk.
Richard Schabacker — Forbes’ youngest financial editor — catalogued the chart patterns in 1932. When he died in 1938, his research passed to his brother-in-law, Robert D. Edwards, who kept testing every pattern against fresh tape.
John Magee — an MIT-trained engineer — joined Edwards in Springfield, Massachusetts. He brought an engineer’s rigor to the charts: hand-drawn, to scale, every day — and famously worked in a windowless office so nothing but the chart itself could sway a judgement.
«Technical Analysis of Stock Trends» — the first systematic textbook of pattern analysis: trends, support and resistance, head-and-shoulders, triangles, flags, gaps, and the measured-move rule for targets. It codified what Dow implied and Schabacker catalogued.
Magee ran his advisory from Springfield until the 1980s; the book has never left print —eleven editions across eight decades. Traders still call it, simply, the bible.
The Dow inheritance, restated as an axiom: a trend in force continues until it demonstrably reverses. The whole craft is telling the pause from the turn — and the patterns are how the tape tells you which is which.
A level is the market’s memory: where buyers defended, they tend to defend again. And the book’s sharpest observation —broken resistance becomes support, and broken support becomes resistance. Regret and relief swap sides at the same price.
A head-and-shoulders is not magic — it is demand failing three times at descending strength. Every pattern in the book is a repeatable picture of one side losing the argument — which is why they repeat, and why they project.
Every pattern answers one question: is the trend reversing or resting? Head-and-shoulders, double tops and rounding turns end trends. Triangles, flags and rectangles are the trend catching its breath.
Who makes a ceiling become a floor?The trapped and the regretful. Those who sold the level buy their shares back at break-even; those who missed the breakout buy the first dip. Their orders stack at the old price —and a floor appears where a ceiling stood.
The book’s iron caveat: a breakout without a swell of volume is suspect. Volume should expand in the direction of the pattern’s resolution — and shrink inside the pattern as it builds.
Measure the pattern’s height; project it from the break. A 40-point head-and-shoulders projects 40 points below the neckline. Not a promise — a disciplined first target that kills greed and guesswork.
Magee’s practical gift: the pattern defines the stop. Back inside the neckline, back inside the triangle — the picture is broken, the trade is wrong, and the loss is taken small.
A head-and-shoulders neckline breaks on heavy volume. The classical first target is…
Price falls back to a resistance level it broke last month. The classical reading?
A symmetrical triangle forms inside an uptrend; volume shrinks bar by bar. The odds favor…
Magee papered over his office windows and refused to read a newspaper less than two weeks old.No tips, no headlines, no weather — only the chart, drawn by hand, judged by rule. His point survives every technology cycle since: the discipline is the edge — the pattern merely tells you where to apply it.
«The market value of a security is determined solely by the interaction of supply and demand.»— EDWARDS & MAGEE · TECHNICAL ANALYSIS OF STOCK TRENDS · 1948
Every pattern scanner, every «classic setup» on every platform runs on definitions this book wrote down.Schabacker catalogued, Edwards refined, Magee engineered — and eight decades later the pictures still repeat, because crowds still argue the same way.