As of 11/22/2024
Indus: 44,297 +426.16 +1.0%
Trans: 17,367 +194.86 +1.1%
Utils: 1,067 -8.74 -0.8%
Nasdaq: 19,004 +31.23 +0.2%
S&P 500: 5,969 +20.63 +0.3%
|
YTD
+17.5%
+9.2%
+21.0%
+26.6%
+25.1%
|
 46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,200 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 |
As of 11/22/2024
Indus: 44,297 +426.16 +1.0%
Trans: 17,367 +194.86 +1.1%
Utils: 1,067 -8.74 -0.8%
Nasdaq: 19,004 +31.23 +0.2%
S&P 500: 5,969 +20.63 +0.3%
|
YTD
+17.5%
+9.2%
+21.0%
+26.6%
+25.1%
| |
|
46,000 or 43,000 by 12/01/202418,000 or 16,600 by 12/01/20241,200 or 1,000 by 12/01/202420,000 or 18,400 by 12/01/20246,100 or 5,800 by 12/01/2024 | ||
Initial release on 7/18/2019. Statistics updated on 8/27/2020.
Extended V-tops are chart patterns that are easy to spot after they have completed. They are inverted V-shaped price patterns on the chart but sport a small retrace on the right side.
Extended V-top Chart Pattern
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The price target is the bottom of the start of the pattern.
The above numbers are based on 1,217 perfect trades. See the glossary for definitions.
I programmed my computer to find extended 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.
The following table shows some of the guidelines I used.
| 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. |
| Extension | Look for price to pause on the way down. Often this pause will look like a flag, sloping slightly upward. |
| No Spike | I removed from consideration any extended V-top with an unusually long price bar as the top. |
| Angle | Price rises and reverses, forming an angle with the vertical. In some extended 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. |
Trading an extended V-top is easier than trading a regular V-top. When price breaks out of the flag or pennant in the extended portion of the inverted V, take a position. Expect price to approach the price level of the start of the inverted V on the left. It may not reach the exact bottom, so be prepared to exit early.
Alternatively, you can wait for price to retrace lower than 38.2% and take a position then. Ride the stock lower.
Consult the associated figure on the right.
| Trading Tactic | Explanation |
The Measure Rule
|
| Breakout | Measure the height of the Extended V-top from B to A. When price on the way to C retraces 38.2% of AB, it constitutes a breakout. The 38.2% value is arbitrary. | |
| Measure rule | The price of A 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 extended V-top and divide it by the breakout price. If it's larger than 22%, then it's a tall pattern) patterns outperform short ones. | |
| Yearly low | For best performance, extended V-tops with breakouts within a third of the yearly low perform best. |
The above figure shows an example of an extended V top chart pattern. Price begins the advance to the summit in early June and peaks near July. A black candle signals a reversal followed by the extension in a small congestion region that slants upward. Once the stock pierces the bottom of this region, price tumbles, approximating the angle at which price climbed to the V top.
The stock exceeded the measure rule target when it dropped below the start of the pattern (that is, dropped below about 45.50).
-- Thomas Bulkowski
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