As of 07/23/2024
  Indus: 40,358 -57.35 -0.1%  
  Trans: 15,656 -244.42 -1.5%  
  Utils: 952 -5.51 -0.6%  
  Nasdaq: 17,997 -10.22 -0.1%  
  S&P 500: 5,556 -8.67 -0.2%  
YTD
 +7.1%  
-1.5%  
 +8.0%  
 +19.9%  
 +16.5%  
  Targets    Overview: 07/12/2024  
  Up arrow41,500 or 40,000 by 08/01/2024
  Up arrow16,500 or 15,600 by 08/01/2024
  Up arrow1,000 or 910 by 08/01/2024
  Up arrow19,200 or 17,800 by 08/01/2024
  Up arrow5,750 or 5,500 by 08/01/2024
As of 07/23/2024
  Indus: 40,358 -57.35 -0.1%  
  Trans: 15,656 -244.42 -1.5%  
  Utils: 952 -5.51 -0.6%  
  Nasdaq: 17,997 -10.22 -0.1%  
  S&P 500: 5,556 -8.67 -0.2%  
YTD
 +7.1%  
-1.5%  
 +8.0%  
 +19.9%  
 +16.5%  
  Targets    Overview: 07/12/2024  
  Up arrow41,500 or 40,000 by 08/01/2024
  Up arrow16,500 or 15,600 by 08/01/2024
  Up arrow1,000 or 910 by 08/01/2024
  Up arrow19,200 or 17,800 by 08/01/2024
  Up arrow5,750 or 5,500 by 08/01/2024

Bulkowski on the Inverted V Pivot Chart Pattern

Released 12/21/2020.

The inverted V pivot is a 3-bar pattern based on Vicky Wong's V pivot except that it's flipped upside down. I tested the performance of the pattern and present the results below.

V pivot bottom chart pattern
Inverted V Pivot

 

Inverted V Pivot: Important Bull Market Results

Overall performance rank (1 is best): Not ranked but it would place first out of three (weekly patterns). It's a 3-way tie.
Break even failure rate: 11%
Average drop: 19%
Percentage meeting price target: 41%

The above numbers are based on almost 1,400 perfect trades on the weekly scale. See the glossary for definitions.

Inverted V Pivot: Identification Guidelines

Refer to the image to the right of the table.

CharacteristicDiscussion inverted V pivot bottom chart pattern shape
Weekly chartUse the weekly chart to locate V pivots.
Price trendUsually (63% of the time) upward leading to the pattern.
ShapeLooks like an inverted V, a 3-bar pattern with the middle bar (2) above the adjacent ones (1, 3), as shown in the picture to the right.
PercentagesFor identification, I put a 2% minimum on each price bar. By that, I mean the high price of bar 2 is at least 2% above the high prices of bars 1 and 3.
ConfirmationThe pattern confirms as valid when price closes below the lowest price of the three bars. In this example, that means a close below bar 3.

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Inverted V Pivot: Trading Tips

Trading TacticExplanation V pivot bottom chart pattern measure rule
The Measure Rule
Measure ruleSee the Measure Rule figure to the right. Compute the height from the lowest price (point B) to the highest price (A) in the 3-week pattern. Subtract the height from the bottom of the pattern (B) to get the price target (C). Price reaches the target 41% of the time on average, so be conservative in your projections.
UptrendsInverted V pivots will usually (63% act as reversals of the uptrend) mark the end of a short-term uptrend. The images in this article provide examples.
BreakoutA breakout occurs when price closes below the lowest price bar in the 3-bar pattern. In the figure, that means a close below B.
ConfirmationThe pattern confirms as valid when price breaks out downward. Because the pattern is short, place an order to short the stock a penny below the lowest bar in the 3-bar pattern. That way, you'll enter a trade with less slippage.

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Inverted V Pivot: Examples

Here is a slider show of three examples.

1 / 3
chart pattern

On this chart, I highlight the inverted V pivot (A) in the inset. In this example, price constructs a skyscraper which towers over the landscape. The 3-bar pattern (weekly chart, by the way) obeys the identification guidelines. The center peak is more than 2% above the surrounding ones. It may not look as if price drops much, but minor price changes can be huge on this price scale.

Patterns B and C signal more of a downtrend to happen. There are other inverted V pivots not shown on this chart. In fact, the pattern is prolific. I only catalogued one of every 5 patterns.

Another example appears on the next slide.
2 / 3
chart pattern

This chart shows all of the valid inverted V pivots I found. Pivot B calls the downward reversal exactly. The others act as continuation or reversal patterns.

The inverted V pivot at A looks like it doesn't confirm, but it does. Price closes a penny below the last bar in the 3-bar pattern the week after the pattern ends but that's as far as price drops. Price resumes the upward trend thereafter.

Another example appears on the next slide.
3 / 3
chart pattern
I highlight this inverted V pivot because it occurs in a downtrend. It doesn't act as a reversal pattern. Rather, it points the way to a continuation of the downward price trend.
The end.

-- Thomas Bulkowski

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See Also

 

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