Recently spotted in live market
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
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