Below is a slider quiz to test your ability to identify bump-and-run reversal tops and trade them. Captions appear below the pictures in red for guidance, so be sure to scroll down far enough to read them.
1 / 7
This is a bump-and-run reversal top on the daily, arithmetic (not log) scale. The lead-in phase (AB) shows price in a narrow trading range, often a month or longer, but
be flexible. The bump phrase follows, BC, where price balloons upward, often at least twice the vertically-measured height found during the lead-in phase. There can be multiple bumps.
After the bump, a downhill run occurs which sends price down (at C) threw the up-sloping trendline drawn from the lead-in phase, extended forward as shown.
2 / 7
Find as many bump-and-run reversal tops as you can. For help, click here.
3 / 7
Both of these BARR tops have dual bumps, which happens 18% of the time. Point A shows the first bump, B the second. Volume is often high at the start of
the pattern (not in this case), bump start (D) and breakout (E).
4 / 7
Find as many bump-and-run reversal tops as you can. For help, click here.
5 / 7
This chart is on the log scale (oops) so the height of the phases may be more difficult to compare. After the blue BARR, price doesn't drop much. How far will the red
BARR see price drop? Let's look at our options (next slide).
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Here's the BARR with a downward breakout as the last price bar on the right. How far down will price drop? Pick a number shown by one of the green lines..
7 / 7
If you chose 11, you'd be correct even though the stock reached its low a bit above 11.
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