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.

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 Candlestick Charts book.
Encyclopedia of Chart Patterns 2nd Edition book.
Trading Classic Chart Patterns book.

Bulkowski’s Bump-and-Run Reversal Tops

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 05/25/2016
17,852 145.46 0.8%
7,744 62.56 0.8%
648 -2.63 -0.4%
4,895 33.83 0.7%
2,091 14.48 0.7%
YTD
2.4%
3.1%
12.2%
-2.2%
2.3%
Tom's Targets    Overview: 05/12/2016
18,400 or 17,300 by 06/01/2016
7,300 or 8,100 by 06/01/2016
625 or 665 by 06/01/2016
5,050 or 4,750 by 06/15/2016
2,120 or 2,020 by 06/01/2016

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

For more information on this pattern, read Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book., pictured on the right, pages 132 to 148. 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 top is a chart pattern that is a very good performer in both bull and bear markets, judging by the low break even failure rate and high average decline after the breakout. The chart pattern was discovered by Thomas Bulkowski in 1996 while researching price prediction techniques using trendlines. Originally called the bump-and-run formation (BARF), the name was changed for obvious reasons.

A bump and run reversal top appears

Bump-and-Run Reversal Top

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

Overall performance rank (1 is best): 3 out of 21
Break even failure rate: 5%
Average decline: 19%
Pullback rate: 62%
Percentage meeting price target: 78%

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

Bump-and-Run Reversal Top 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.
Rising trendlineA trendline connecting the price valleys rises upward at 30 to 45 degrees, but this varies with scaling. Do not use horizontal or near-horizontal trendlines and avoid patterns with steep (over 60 degrees) trendlines.
Lead-in phaseThe lead-in is the section at the start of the pattern and it precedes the bump phase. Price follows a rising trendline. The figure to the lower right shows an example.
Lead-in heightThe tallest distance in the first quarter of the chart pattern, measured vertically, is the lead-in height. Must be at least $1, but preferably $2 or more. The chart on the right shows the measure between the two blue dots, vertically, from trendline to price low.
Lead-in durationAt least a month.
Bump phasePrice rises in the bump phase following a steeper trendline (45 to 60 degrees) on high volume usually after a favorable event (earnings report, rating upgrades). Price rounds over and eventually returns to the lower, 30-degree trendline setup in the lead-in phase. The chart on the right shows an example.
Bump heightMeasured from the peak to the 30-degree trendline, it must be at least twice the lead-in height. The chart on the right shows an example between the two blue dots.
Downhill runAfter price returns to the 30-degree trendline, price may bump up and form additional bumps or slide along the trendline before plunging lower in a downhill run. The figure to the right shows one bump up followed by the downhill run.
VolumeHigh at the start of the pattern, at the bump start, and at the downward breakout (where price pierces the 30-degree trendline).
ConfirmationThe pattern confirms as a valid one when price closes below the 30-degree trendline.
Measure lines for a bump and run reversal appear.
BARR Top
Top of page   More

Bump-and-Run Reversal Top Trading Tips

Consult the associated figure on the right.

Trading TacticExplanation
Measure ruleCompute the lead-in height then multiply it by the above "percentage meeting price target." Subtract the result from the breakout price (B) to get a target.
BreakoutSell an existing holding or sell short when price closes below the 30-degree trendline AB at B.
ConfirmationWait for confirmation before placing a trade.
Warning lineDraw a line parallel to the 30-degree trendline and lead-in height above it (the lowest line parallel to AB). The line warns that the stock is making a move and is entering the sell zone, an area between the warning and sell lines.
Sell lineDraw additional trendlines parallel to the warning line, each lead-in height above it (E, shows as the green arrows). Consider selling when price touches the sell line, especially if the bump is narrow not rounded. Delay selling if price continues moving up. When the stock rounds over and touches a lower sell line (C), then close out your position. The figure to the right shows the sell lines and price piercing a lower sell line, suggesting it is time to take profit.
ReversalsPatterns that act as reversals tend to perform better than do those acting as continuations of the prevailing price trend.
PullbacksPullbacks hurt performance. The link to the left defines a pullback, and this link shows performance.
Dual bumps28% show additional bumps after the first one. The second bump would begin at B, rise up, round over and crash through the 30-degree trendline before staging a downward breakout.
Measure lines for a bump and run reversal appear.
The Measure Rule
Top of page   More

Bump-and-Run Reversal Top Example

bump and run reversal chart pattern example

The above figure shows an example of a bump and run reversal top chart pattern, highlighted by the blue trendline.

Price begins the bump and run reversal at A and moves up in a confined trading range until the bump phase begins at B. Price zooms upward and then moves in a wide trading range, forming a descending triangle chart pattern (red lines). Price tumbles downward out of the descending triangle and pierces the 30-degree trendline at C, staging a breakout.

-- Thomas Bulkowski

Top of page   More  

Other Bump-and-Run Reversal Top Examples

See Also

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. The cat said I’m dismissive and sarcastic. What does he know? He’s only 10" tall.