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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 V Tops and V Bottoms

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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.

V Tops and V Bottoms: Summary

V tops and V bottoms are chart patterns that are easy to spot after they have completed. They appear just like their names suggest, V-shaped or inverted V-shaped price patterns on the chart. See also Extended V Tops and Extended V Bottoms.

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My book, Encyclopedia of Chart Patterns Second EditionEncyclopedia of Chart Patterns 2nd Edition book. pictured on the left, takes an in-depth look at 63 chart and event patterns, including performance statistics.

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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V Tops

V top chart pattern
V top chart pattern

V Tops: Identification Guidelines

CharacteristicDiscussion
UptrendLook for price to make a straight-line run upward with few or no pauses, often fitting inside a channel (two parallel trendlines).
ReversalPrice at the top of the inverted V will form a one-day reversal, island reversal, or tail, usually on heavy volume.
TrendlineAfter the reversal, price pierces an up-sloping trendline drawn along the price lows, confirming the trend change.
DowntrendPrice trends down, usually at the mirror angle of the uptrend. If price climbed by 45 degrees, price will tumble following a 45 degree trend. The price trend tends to be a straight-line run with few or no pauses, often fitting inside a channel.
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V Tops: Trading Tips

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 the 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.

V Top Example

V top chart pattern example

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 is over.

V Bottoms

V bottom chart pattern
V bottom chart pattern

V Bottoms: Identification Guidelines

Many of the identification guidelines are similar to the V top.

CharacteristicDiscussion
DowntrendLook for price to make a straight-line run downward with few or no pauses, often fitting inside a channel.
ReversalPrice at the bottom of the V will form a one-day reversal, island reversal, or tail, usually on heavy volume, perhaps gapping upward.
TrendlineAfter the reversal, price pierces a down-sloping trendline drawn along the price tops, confirming the trend change.
UptrendPrice trends up, usually at the mirror angle of the downtrend. If price dropped by 30 degrees, price will rise following a similar angle. The price trend tends to be a straight-line run with few or no pauses, often fitting inside a channel.
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V Bottoms: Trading Tips

Trading a V bottom is difficult because calling the turn at the bottom of the V is tough to do correctly. You can use a down trendline (drawn along the descending price tops leading to the V bottom) pierce as the buy signal but it's best to wait 2 or 3 days for price to confirm the tend change. You can also check the mirror angle. Often price will rise in an angle similar to the descent. If that appears to be the case, then buy.

Check other stocks in the same industry for a trend change. Usually the industry moves as a group and a reversal in one still will appear in other stocks in the industry as well (often the same chart pattern, such a head-and-shoulders bottom).

V Bottom Example

V bottom chart pattern example

This is a good example of a V bottom chart pattern. Price drops at a 45 degree slope and then reverses, moving up at a slightly steeper slope. The V bottom also appears to be a head-and-shoulders bottom with the right bottom higher than the left -- call it an ugly head-and-shoulders bottom.

-- Thomas Bulkowski

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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. Consciousness: that annoying time between naps.