Price Patterns - Bump and Run Reversal Top Defines Price Bubble
When prices surge to the upside at an ever increasing rate, it's just
a matter of time before the price bubble bursts and prices move to the
downside. The bump and run reversal pattern is easy to spot and will help
you confirm that a price bubble has formed.
The bump and run reversal pattern includes three phases:
- The lead-in phase is the price segment along an intermediate or long-term
trend line above which the bump occurs.
- The bump is the price segment of rapidly increasing prices from the
lean-in trend line to the peak price. The rate of change of the bump
trend line is much greater than the rate of change of the lead-in trend
line.
- The run phase begins when prices on the bump downside fall below the
lead-in trend line.
In the chart of Aluminum Corporation of China (ACH),
the bump trend line (green line from lead-in trend line to bubble peak)
is very steep. For the run phase, prices are at a resistance level (horizontal
line) and could turn down (red dashed line).
In real time, potential bump and run reversals occur frequently and are
easy to spot. When you see prices moving up very sharply from an established
tend line, they are probably on the upside of the bump phase.
The bump end run reversal top is also known as the bump and run reversal
(BARR) and the bump and run reversal formation (BARF). Take your pick.
Related Articles:
Price Patterns - A Bubble Top Is an Extreme Pattern
Price Patterns - A Double Top Signals a Downside
Price Patterns - Head and Shoulders
Top Is a Complex Pattern
Price Upsides Often Occur in Three
Stages
Posted February 25, 2008.
Home
| Making Money
| Portfolios
| Dividends
| Retirement
| Articles
| Charts
| Stocks
| Tables
| 
