As of 01/20/2021
  Indus: 31,188 +257.86 +0.8%  
  Trans: 13,126 +225.85 +1.8%  
  Utils: 865 +7.27 +0.8%  
  Nasdaq: 13,457 +260.07 +2.0%  
  S&P 500: 3,852 +52.94 +1.4%  
YTD
 +1.9%  
 +4.9%  
 +0.0%  
 +4.4%  
 +2.6%  
  Targets    Overview: 01/13/2021  
  Up arrow32,000 or 29,600 by 02/01/2021
  Up arrow13,500 or 12,300 by 02/01/2021
  Up arrow890 or 800 by 02/01/2021
  Up arrow13,500 or 12,400 by 02/01/2021
  Up arrow3,900 or 3,625 by 02/01/2021
CPI (updated daily): Arrows on 11/2/20
As of 01/20/2021
  Indus: 31,188 +257.86 +0.8%  
  Trans: 13,126 +225.85 +1.8%  
  Utils: 865 +7.27 +0.8%  
  Nasdaq: 13,457 +260.07 +2.0%  
  S&P 500: 3,852 +52.94 +1.4%  
YTD
 +1.9%  
 +4.9%  
 +0.0%  
 +4.4%  
 +2.6%  
  Targets    Overview: 01/13/2021  
  Up arrow32,000 or 29,600 by 02/01/2021
  Up arrow13,500 or 12,300 by 02/01/2021
  Up arrow890 or 800 by 02/01/2021
  Up arrow13,500 or 12,400 by 02/01/2021
  Up arrow3,900 or 3,625 by 02/01/2021
CPI (updated daily): Arrows on 11/2/20

Bulkowski on the V Pivot Chart Pattern

 

Released 12/17/2020.

Vicky Wong identified this pattern and brought it to my attention. Here's what she writes about it.

"The rapid [Covid-19] meltdown of February/March 2020 redefined "velocity" for many market participants, including novice traders like me from Singapore. Expectedly, my portfolio was in bad shape. The eventuality of a trend reversal solaced me.

"Being an avid reader of ThePatternSite.com (particularly, Pattern Trading Setups for the Weekend), I've learned that pipe bottoms and horn bottoms are very common when a stock transitions from trending down to range or trending up.

"Sometime in June 2020, I chanced upon a modified version of the horn bottom, where the middle bar of a horn was lower than the other two. Over the next three months, I identified more of them and call them V Pivots.

"Two features that popped: They are reliable at calling bottoms (i.e. they usually mark the end of downtrend) and post breakout performance is remarkably good. I conclude there is some degree of practical application."

I tested the performance of the pattern and present the results below.

V pivot bottom chart pattern
V Pivot Bottom Chart Pattern

 

V Pivot: Important Bull Market Results

Overall performance rank (1 is best): Not ranked but it would place third out of four (weekly patterns)
Break even failure rate: 8%
Average rise: 55%
Percentage meeting price target: 74%

The above numbers are based on almost 1,400 perfect trades on the weekly scale. See the glossary for definitions.

V Pivot: Identification Guidelines

Refer to the image to the right of the table.

CharacteristicDiscussion V pivot bottom chart pattern
Weekly chartUse the weekly chart to locate V pivots.
Price trendRandom. Fifty-one percent act as reversals of the downward price leading to the pattern.
ShapeLooks like a V, a 3-bar pattern with the middle bar below the adjacent ones. The picture to the right shows the V pivot composed of bars 1, 2, and 3.
PercentagesFor identification, using the low price of each bar in the comparison, I used a 2% minimum: The low at bar 1 is at least 2% above the low of bar 2. The low of bar 3 is at least 2% above the low of bar 2.
ConfirmationThe pattern confirms as valid when price closes above the highest price in the 3 bars. In this example, that means a close above bar 1 (the highest priced bar among 1, 2, and 3).

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V Pivot: Trading Tips

Trading TacticExplanation V pivot bottom chart pattern measure rule
The Measure Rule
Measure ruleSee the Measure Rule figure to the right. Compute the height from the lowest price (point A) to the highest price (B) in the 3-week pattern. Add it to the top of the pattern (B) to get the price target (C). Price reaches the target 74% of the time on average.
VolumeV pivots with heavy breakout volume outperform (on average).
BreakoutA breakout occurs when price closes above the highest price bar in the 3-bar pattern. In the figure, that means a close above line B (above the first bar in this pattern).
ConfirmationWait for a breakout before entering a position.

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V Pivot: Examples

Here is a slider show of three examples.

1 / 3
chart pattern
On this chart, I highlight one V pivot (B) in the inset. Circled in green (A) is another similar pivot but I didn't check to see if it meets the ID guidelines of a 2% clearance of the lows. Because pivot B is so tall, you sacrifice profit while waiting for confirmation. Note that many V pivots appeared in the Covid-19 drop in March. Buy when price closes above highest of the 3 bars, like that shown.
Another example appears on the next slide.
2 / 3
chart pattern
Circled in red is the V pivot, a 3-bar pattern. I show this chart because the pivot appears in an upward price trend. My computer program still calls this a reversal because price changes trend from slightly downward to up (it's at the bottom of a retrace).
Another example appears on the next slide.
3 / 3
chart pattern
Here's another example of a V pivot during the Covid-19 pandemic. This one happens later in the year than shown in the first slide.
The end.

-- Thomas Bulkowski

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See Also

 

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My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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