Subscribe to RSS feeds Bulkowski Blog via RSS

Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Picture of Bumper.
Kindle
Paperback
Nook
Picture of the head's law.
Kindle
Paperback
Nook
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Encyclopedia of Chart Patterns 2nd Edition book.

Bulkowski's Bump-and-Run Reversal Bottoms

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 12/14/2018
24,101 -496.87 -2.0%
9,514 -158.63 -1.6%
758 -1.70 -0.2%
6,911 -159.67 -2.3%
2,600 -50.59 -1.9%
YTD
-2.5%
-10.3%
4.8%
0.1%
-2.8%
Tom's Targets    Overview: 12/14/2018
25,000 or 23,500 by 01/01/2019
10,100 or 9,000 by 01/01/2019
740 or 775 by 01/01/2019
7,300 or 6,700 by 01/01/2019
2,700 or 2,525 by 01/01/2019

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

Statistics updated on 7/16/2018

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 115 to 131. That chapter gives a complete review of the chart pattern, compared to what is described below.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

$ $ $

The bump-and-run reversal bottom is a chart pattern that is a surprisingly good performer in both bull and bear markets. It has a low break even failure rate and high average rise after the breakout. Discovered by Thomas Bulkowski in 1999.

The bump and run reversal bottom

Bump-and-Run Reversal Bottom

Important Bull Market Results for Bump-and-Run Reversal Bottom

Overall performance rank (1 is best): Not ranked
Break even failure rate: 7%
Average rise: 57%
Throwback rate: 61%
Percentage meeting price target (pattern's top): 76%

The above numbers are based on 1,099 perfect trades. See the glossary for definitions.

Bump-and-Run Reversal Bottom Identification Guidelines

Consult the associated figure on the right. The numbers cited should be used as guidance, not firm rules. For example, if the lead-in trendline drops by more than 45 degrees, it can be fine.

CharacteristicDiscussion
Arithmetic scaleUse the arithmetic chart, not the semi logarithmic one because you will use it to measure vertical distances.
ShapeA frying pan, tilted down, with the handle on the left.
TrendlineDuring the beginning of the pattern, price often follows a down-sloping trendline that ranges from 0 to 45 degrees (rarely more).
Lead-in phaseThe handle portion of the frying pan is called the lead-in phase as it leads in to the bump phase. The chart to the lower right shows the location.
Lead-in heightMeasures from the trendline drawn across the highs to the handle low. Select the widest distance between the trendline and the low, measured vertically, in the first quarter of the chart pattern. The chart to the right shows an example. The height is between the two blue dots.
Lead-in durationAt least a month (average is 35 days), but this varies widely.
Bump phaseThis is the frying pan. The down-sloping trendline deepens to 60 degrees or more. Price drops rapidly then levels out and turns around, forming a rounded turn. Price may pause at the 0 to 45-degree trendline (see Trendline above) before moving higher. The chart to the right shows the location of the bump phase.
Bump heightMeasured from the trendline to the lowest low, vertically, and it should be at least twice the lead-in height (but allow variation). The chart to the right shows the measure between the two blue dots.
Uphill runAfter the bump phase, price begins an uphill run. I show the run phase on the chart to the right.
VolumeHigh during the start of the pattern, the bump start, and upward breakout.
ConfirmationThe pattern confirms when price closes above the down-sloping trendline. Do NOT accept any patterns which does not show a close above the blue trendline (after pattern's end).
Bump and run reversal bottom chart explanation
BARR Bottom
Top of page   More

Bump-and-Run Reversal Bottom Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation
Measure ruleThe highest high in the pattern (point A in the chart to the right) is the target.
BreakoutBuy when price closes above the down-sloping 0 to 45-degree trendline, B. Alternatively, draw several trendlines parallel to and lead-in height below the top trendline (the green arrows at E). Buy when price fails to close below the next lower trendline and rises above the adjacent, higher trendline (C).
Old highWhen price rises to the old high (A , where the pattern begins) consider selling if the stock shows weakness.
ThrowbackThrowbacks hurt performance. The link to the left explains what to look for and this link discusses performance.
Dual bumpA second downward bump occurs 12% of the time. The bump would begin at B, round downward before joining back with the trendline and staging an upward breakout.
Bump and run reversal bottom chart pattern measure rule
The Measure Rule
Top of page   More

 

Bump and run reversal bottom chart pattern example

Bump-and-Run Reversal Bottom Example

The chart on the right shows an example of a bump and run reversal bottom chart pattern.

Price begins the pattern at A and forms the lead-in phase followed by the bump phase. The lead-in height (C) measured vertically, is less than half the bump phase height (D), also measured vertically, as required.

The two measure from the trendline to the lowest low directly below (not to where the green arrows point, but the low price directly below).

Price breaks out upward (where the price bar and red line intersect in November) and throws back within a few days, but eventually fulfills the measure rule by climbing to B, near the launch price of A.

-- Thomas Bulkowski

Top of page   More  

See Also

Written by and copyright © 2005-2018 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Please don't interrupt me when I'm talking to myself.