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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

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Bulkowski's Bump-and-Run Reversal Bottoms

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 11/20/2014
17,719 33.27 0.2%
9,054 41.00 0.5%
594 -1.24 -0.2%
4,702 26.16 0.6%
2,053 4.03 0.2%
YTD
6.9%
22.3%
21.0%
12.6%
11.1%
Tom's Targets    Overview: 11/14/2014
17,850 or 17,200 by 12/01/2014
9,300 or 8,700 by 12/01/2014
610 or 570 by 12/01/2014
5,000 or 4,500 by 12/01/2014
2,100 or 1,975 by 12/01/2014

Written by and copyright © 2005-2014 by Thomas N. Bulkowski. All rights reserved.

For more information on this pattern, read Encyclopedia of Chart Patterns, Second Edition, 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

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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 very 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): 8 out of 23
Break even failure rate: 2%
Average rise: 38%
Throwback rate: 59%
Percentage meeting price target: 68%

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Bump-and-Run Reversal Bottom Identification Guidelines

Consult the associated figure on the right.

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.
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.
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 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. 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.
Bump and run reversal bottom chart explanation
BARR Bottom
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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 20% of the time. The bump would begin at B, round downward before joining back with the trendline and staging an upward breakout.
Yearly highAVOID trading this pattern near the yearly high. Patterns with breakouts near the high tend to underperform.
Bump and run reversal bottom chart pattern measure rule
The Measure Rule
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Bump and run reversal bottom chart pattern example

Bump-and-Run Reversal Bottom Example

The above figure 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). The bump and run reversal bottom appears within a third of the yearly low, despite what the edited chart shows.

Price breaks out 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

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See Also

Copyright © 2005-2014 by Thomas N. Bulkowski. All rights reserved. Please don't interrupt me when I'm talking to myself.