V-Tops

As of 09/29/2023

Indus: 33,508 -158.84 -0.5%

Trans: 14,969 -17.13 -0.1%

Utils: 817 +1.02 +0.1%

Nasdaq: 13,219 +18.04 +0.1%

S&P 500: 4,288 -11.65 -0.3%

YTD

+1.1%

+11.8%

-15.6%

+26.3%

+11.7%

Targets Overview: 09/15/2023

34,500 or 33,150 by 10/15/2023

15,500 or 14,200 by 10/15/2023

880 or 800 by 10/15/2023

13,750 or 12,700 by 10/15/2023

4,425 or 4,175 by 10/15/2023

Chart Pattern Indicator:

on 9/29/23

As of 09/29/2023

Indus: 33,508 -158.84 -0.5%

Trans: 14,969 -17.13 -0.1%

Utils: 817 +1.02 +0.1%

Nasdaq: 13,219 +18.04 +0.1%

S&P 500: 4,288 -11.65 -0.3%

YTD

+1.1%

+11.8%

-15.6%

+26.3%

+11.7%

Targets Overview: 09/15/2023

34,500 or 33,150 by 10/15/2023

15,500 or 14,200 by 10/15/2023

880 or 800 by 10/15/2023

13,750 or 12,700 by 10/15/2023

4,425 or 4,175 by 10/15/2023

Chart Pattern Indicator:

on 9/29/23

Bulkowski on V-Tops

V-tops are chart patterns that are easy to spot after they have completed. They are inverted V-shaped price patterns on the chart.

V-Tops: Important Bull Market Results

The above numbers are based on 2,416 perfect trades. See the glossary for definitions.

V-Tops: Identification Guidelines

I programmed my computer to find V-tops because to do it any other way would be unfair. I'd pick the patterns which worked and would not see those which didn't.

Characteristic	Discussion
Uptrend	Look for price to make a straight-line run upward with few or no pauses, often fitting inside a channel (two parallel trendlines).
Width	At least 3 weeks to 3 months wide.
Reversal	Price at the top of the inverted V will form a one-day reversal, island reversal, or tail, usually on heavy volume.
Trendline	After the reversal, price pierces an up-sloping trendline drawn along the price lows, confirming the trend change. This is not a requirement, but an observation.
Retrace	Price on the right side must retrace at least 38.2% of the left side.
Breakout	When price retraces 38.2% of the left side, then that's the breakout.
No Pause	There should be no pause between the V-top and the breakout (38.2% retrace value). Otherwise, it's an extended V-top.
No Spike	I removed from consideration any V-top with a single long price bar as the top.
Angle	Price rises and reverses, forming an angle with the vertical. In some V-tops, the left angle will mirror the right one. For example, if price climbed by 30 degrees, price might drop following a similar angle.

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 a lasting 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.

You can calculate a 38.2% retrace of the move up on the left side of the pattern. If price closes below the computed value, then consider selling.

Trading Tactic	Explanation	The Measure Rule
Breakout	Measure the height of the V-top from A to B. When price on the way to C retraces 38.2% of AB, it constitutes a breakout. The 38.2% value is arbitrary.
Measure rule	B is the measure rule target.
Price trend	If price trends down into the pattern, then expect better performance (See the trend start).
Tall patterns	Tall (take the height of the V-top and divide it by the breakout price. If it's larger than 25.3%, then it's a tall pattern) patterns substantially outperform short ones.
Yearly low	For best performance, V-tops with breakouts within a third of the yearly low perform best.
Volume trend	A rising volume trend results in the best post breakout performance.

V-Top: 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 might be over. Plus,the drop might not amount to much anyway.

Bulkowski on V-Tops

V-Tops: Important Bull Market Results

V-Tops: Identification Guidelines

V-Tops: Trading Tips

V-Top: Example

See Also