Bump-and-Run Reversal Bottom?
The bump-and-run reversal bottom is a chart pattern that is a surprisingly good performer in both bull (ranking best for performance) and bear markets (ranking second best). It has a low break even failure rate and high average rise after the breakout. Discovered by Thomas Bulkowski in 1999
Bump-and-Run Reversal Bottom: Important Bull Market Results
Overall performance rank: 1 (best) out of 39
Break even failure rate: 9%
Average rise: 55%
Throwback rate: 61%
Percentage meeting price target (pattern's top): 76%
Shape: A frying pan, tilted down, with the handle on the left.
Trendline: During the beginning of the pattern, price often follows a down-sloping trendline that ranges from 0 to 45 degrees (rarely more).
Lead-in phase: The handle portion of the frying pan is called the lead-in phase as it leads in to the bump phase. The chart to the lower right shows the location.
Lead-in height: Measures from the trendline drawn across the highs to the handle low. Select the widest distance between the trendline and the low, measured vertically, in the first quarter of the chart pattern. The chart to the right shows an example. The height is between the two blue dots.
Lead-in duration: At least a month (average is 35 days), but this varies widely.
Bump phase: This is the frying pan. The down-sloping trendline deepens to 60 degrees or more. Price drops rapidly then levels out and turns around, forming a rounded turn. Price may pause at the 0 to 45-degree trendline (see Trendline above) before moving higher. The chart to the right shows the location of the bump phase.
Bump height: Measured from the trendline to the lowest low, vertically, and it should be at least twice the lead-in height (but allow variation). The chart to the right shows the measure between the two blue dots.
Uphill run: After the bump phase, price begins an uphill run. I show the run phase on the chart to the right.
Volume: High during the start of the pattern, the bump start, and upward breakout.
Confirmation: The pattern confirms when price closes above the down-sloping trendline. Do NOT accept any patterns which does not show a close above the blue trendline (after pattern's end).
Bump-and-Run Reversal Bottom: Important Bull Market Results
Overall performance rank: 1 (best) out of 39
Break even failure rate: 9%
Average rise: 55%
Throwback rate: 61%
Percentage meeting price target (pattern's top): 76%
Shape: A frying pan, tilted down, with the handle on the left.
Trendline: During the beginning of the pattern, price often follows a down-sloping trendline that ranges from 0 to 45 degrees (rarely more).
Lead-in phase: The handle portion of the frying pan is called the lead-in phase as it leads in to the bump phase. The chart to the lower right shows the location.
Lead-in height: Measures from the trendline drawn across the highs to the handle low. Select the widest distance between the trendline and the low, measured vertically, in the first quarter of the chart pattern. The chart to the right shows an example. The height is between the two blue dots.
Lead-in duration: At least a month (average is 35 days), but this varies widely.
Bump phase: This is the frying pan. The down-sloping trendline deepens to 60 degrees or more. Price drops rapidly then levels out and turns around, forming a rounded turn. Price may pause at the 0 to 45-degree trendline (see Trendline above) before moving higher. The chart to the right shows the location of the bump phase.
Bump height: Measured from the trendline to the lowest low, vertically, and it should be at least twice the lead-in height (but allow variation). The chart to the right shows the measure between the two blue dots.
Uphill run: After the bump phase, price begins an uphill run. I show the run phase on the chart to the right.
Volume: High during the start of the pattern, the bump start, and upward breakout.
Confirmation: The pattern confirms when price closes above the down-sloping trendline. Do NOT accept any patterns which does not show a close above the blue trendline (after pattern's end).
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