As of 04/24/2024
Indus: 38,461 -42.77 -0.1%
Trans: 15,078 -358.61 -2.3%
Utils: 893 +6.79 +0.8%
Nasdaq: 15,713 +16.11 +0.1%
S&P 500: 5,072 +1.08 +0.0%
|
YTD
+2.0%
-5.2%
+1.3%
+4.7%
+6.3%
|
 39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 |
As of 04/24/2024
Indus: 38,461 -42.77 -0.1%
Trans: 15,078 -358.61 -2.3%
Utils: 893 +6.79 +0.8%
Nasdaq: 15,713 +16.11 +0.1%
S&P 500: 5,072 +1.08 +0.0%
|
YTD
+2.0%
-5.2%
+1.3%
+4.7%
+6.3%
| |
|
39,800 or 37,150 by 05/01/202416,200 or 15,000 by 05/01/2024885 or 850 by 05/01/202416,700 or 15,800 by 05/01/20245,250 or 5,025 by 05/01/2024 | ||
Initial release on 7/11/2019. Statistics updated on 8/27/2020.
V-tops are chart patterns that are easy to spot after they have completed. They are inverted V-shaped price patterns on the chart.
V-top chart pattern
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The price target is the bottom of the start of the pattern.
The above numbers are based on 2,416 perfect trades. See the glossary for definitions.
I programmed my computer to find V-tops because to do it any other way would be unfair. I'd pick the patterns which worked and would not see those which didn't.
Some of the guidelines shown in the table reflect that automation.
| Characteristic | Discussion |
| Uptrend | Look for price to make a straight-line run upward with few or no pauses, often fitting inside a channel (two parallel trendlines). |
| Width | At least 3 weeks to 3 months wide. |
| Reversal | Price at the top of the inverted V will form a one-day reversal, island reversal, or tail, usually on heavy volume. |
| Trendline | After the reversal, price pierces an up-sloping trendline drawn along the price lows, confirming the trend change. This is not a requirement, but an observation. |
| Retrace | Price on the right side must retrace at least 38.2% of the left side. |
| Breakout | When price retraces 38.2% of the left side, then that's the breakout. |
| No Pause | There should be no pause between the V-top and the breakout (38.2% retrace value). Otherwise, it's an extended V-top. |
| No Spike | I removed from consideration any V-top with a single long price bar as the top. |
| Angle | Price rises and reverses, forming an angle with the vertical. In some V-tops, the left angle will mirror the right one. For example, if price climbed by 30 degrees, price might drop following a similar angle. |
Trading V-tops is not an easy proposition. Draw a trendline along the bottoms as price rises in the first part of the V. When price pierces the trendline, then check for any fundamental news that would account for a reversal. Check other stocks in the same industry to see how they are behaving. Sometimes, one stock will pull the industry down with it.
If you find no fundamental news and other stocks in the industry look good, then a lasting turn may not be at hand. Wait for 3 days and if price continues declining, then sell. Of course, you can also sell once price closes below the trendline.
You can calculate a 38.2% retrace of the move up on the left side of the pattern. If price closes below the computed value, then consider selling.
Consult the associated figure on the right.
| Trading Tactic | Explanation |
The Measure Rule
|
| Breakout | Measure the height of the V-top from A to B. When price on the way to C retraces 38.2% of AB, it constitutes a breakout. The 38.2% value is arbitrary. | |
| Measure rule | B is the measure rule target. | |
| Price trend | If price trends down into the pattern, then expect better performance (See the trend start). | |
| Tall patterns | Tall (take the height of the V-top and divide it by the breakout price. If it's larger than 25.3%, then it's a tall pattern) patterns substantially outperform short ones. | |
| Yearly low | For best performance, V-tops with breakouts within a third of the yearly low perform best. | |
| Volume trend | A rising volume trend results in the best post breakout performance. |
This is a good example of a V-top chart pattern. Price moves up in a straight-line run then drops almost as quickly as it ascended. The difficulty with V-top chart patterns is that by the time you recognize it, the move might be over. Plus,the drop might not amount to much anyway.
-- Thomas Bulkowski
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