A bump and run reversal pattern highlights the end of a trend and the start of a new one.
Often formed when an asset goes through a rapid rise (think BTC 2018 into early 2019) due to excessive speculation.
The bump and run pattern was introduced by Thomas Bulkowski in 1996 while studying price prediction techniques using trend lines.
A bump and run reversal pattern highlights the end of a trend and the start of a new one.
Often formed when an asset goes through a rapid rise (think BTC 2018 into early 2019) due to excessive speculation.
The bump and run pattern was introduced by Thomas Bulkowski in 1996 while studying price prediction techniques using trend lines.
Key Points of the Lesson
UTILITY
Bump and run pattern is a reversal bottom pattern
High win rate on higher time frames.
Can be used inversely for a top reversal pattern.
IMPLEMENTATION
Three Phases:
Lead-in Phas ⇒ high, followed by downtrend, then a large sell-off.
Bump Phase ⇒ bottoming pattern ( for example: Inverse Head and Shoulder, Adam and Eve, Cup and Handle).
Uphill Run ⇒ price breaks the resistance trendline with volume.
PRACTICAL EXAMPLE
TIPS & TRICKS
Volume is very important on the breakout of the resistance trendline.
Preferred to have high volume at formation start and/or bump start.
Target of Uphill Run = high of the Lead-in Phase.
Entry upon breakout of resistance trendline with high volume.
Best results are on daily and higher time frames.
TAKE HOME MESSAGE
Powerful 3-phase reversal pattern.
Breakout target high of Lead-in Phase.
Volume upon breakout is important.