V Tops and V Bottoms (2024)

V Tops and V Bottoms: Summary

V tops and V bottoms are chart patterns that are easy to spot after they have completed. They appear just like their names suggest, V-shaped or inverted V-shaped price patterns on the chart. See also Extended V Tops and Extended V Bottoms.

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Identification Guidelines

Trading Tips

Example

Identification Guidelines

Trading Tips

Example

V top chart pattern

V Tops: Identification Guidelines

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V Tops: Trading Tips

Trading V tops is not an easy proposition. Draw a trendline along the bottoms as price rises in the first part of the V. When price pierces the trendline, then check for any fundamental news that would account for a reversal. Check other stocks in the same industry to see how they are behaving. Sometimes, one stock will pull the industry down with it.

If you find no fundamental news and other stocks in the industry look good, then the turn may not be at hand. Wait for 3 days and if price continues declining, then sell. Of course, you can also sell once price closes below the trendline.

V Top Example

This is a good example of a V top chart pattern. Price moves up in a straight-line run then drops almost as quickly as it ascended. The difficulty with V top chart patterns is that by the time you recognize it, the move is over.

V bottom chart pattern

V Bottoms: Identification Guidelines

Many of the identification guidelines are similar to the V top.

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V Bottoms: Trading Tips

Trading a V bottom is difficult because calling the turn at the bottom of the V is tough to do correctly. You can use a down trendline (drawn along the descending price tops leading to the V bottom) pierce as the buy signal but it's best to wait 2 or 3 days for price to confirm the tend change. You can also check the mirror angle. Often price will rise in an angle similar to the descent. If that appears to be the case, then buy.

Check other stocks in the same industry for a trend change. Usually the industry moves as a group and a reversal in one still will appear in other stocks in the industry as well (often the same chart pattern, such a head-and-shoulders bottom).

V Bottom Example

This is a good example of a V bottom chart pattern. Price drops at a 45 degree slope and then reverses, moving upat a slightly steeper slope. The V bottom also appears to be a head-and-shoulders bottom with the right bottom higherthan the left -- call it an ugly head-and-shoulders bottom.

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See Also

• Explore extended V tops and extended V bottoms.
• Adam and Eve patterns. What are they and how can they help?
• Double bottoms, overview. Article explains the 4 varieties.
• Busted chart patterns. The answer to profits?
• Stocks that double. Discover what attributes they share.
• Price mirrors. How can they be used for price prediction?
• The nature of bottoms.
• Finding the Market Bottom
• Swing rule. A reliable way to predict price targets.

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