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bump and reversal

PRICE ACTION – THE BUMP AND RUN REVERSAL PATTERN

Recently spotted in live market

bump and reversal pattern

Bump-and-Run Reversal Bottoms

trend

We expect a bullish move when a bump and run reversal pattern appears.

Sometimes it’s a short-term bullish reversal.

Features of the pattern

  1.  Looks like a frying pan with the handle on
the left following a trend line down until a large decline ensues.

 2.  The handle on the left should be sloping downward.

  3.  In the bump phase of a  pattern, there is a sudden decrease in price.

 

Breakout identification

Should break the downward sloping line upwards with momentum.

Volume is expected to be high for a bump and run reversal to work successfully.

It’s wiser to wait for a retest once the price breaks the resistance Line

An example on trading a bump and reversal bottom Pattern

A Bump and reversal bottom failure

Caution

In the book Encylopedia of chart patterns by Thomas Bulowkski, he suggests a different method of Trading a Bump and Run Reversal Bottom. 

The book suggests that we get into a trade at the end of the bump phase and take profits at the Patterns high. 

I suggest letting the pattern complete because a new trader would find it extremely difficult to find a bottom in the bump phase. once you are emotionally experienced you can trade at the bottom of the pattern. 

Bump-and-Run Reversal tops

Trend

We expect a bearish move when a bump and run reversal pattern appears.

Sometimes it’s a short-term bearish reversal.

features of the pattern

1.  Looks like a frying pan with the handle on
the left following a trend line up until a large incline ensues.

 2.  The handle on the left should be sloping upward.

  3.  In the bump phase of a bump and run reversal pattern, there is a sudden increase in price.

 

Breakout identification

Should break the upward sloping line upwards with momentum.

Volume is expected to be high for a bump and run reversal to work successfully.

It’s wiser to wait for a retest once the price breaks the resistance Line

An example of trading a bump and reversal top Pattern

Bump and run reversal top

2 thoughts on “PRICE ACTION – THE BUMP AND RUN REVERSAL PATTERN”

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