Bump And Run Reversal Bottom Pattern
- This pattern is observed during a bearish rally.
- It generally leads to a trend reversal and a bullish rally is seen thereafter.
This is the 4hr chart of Tata Steel (NSE) around June-Aug, 2018
AB = lead-in phase, BC = bump phase
- The pattern starts with a bearish trend for at least one month (lead-in phase) and the trend line at an inclination of 40o
- Then there is a sudden drop in the price level (bump phase) due to some negative news in the market and the trend line inclines around 45o-60o
- Soon, the price falls back to the upper trend line, stays there for a while (run phase) and later it breaks the upper trend line, indicating a trend reversal.
- The trend reversal leads to a huge bullish rally and buyers exhibit their aggressiveness.
- There is a huge volume at the start of the pattern, at the start of the bump and at the breakout of the upper trendline.
- Traders can go long in the trade as soon as the price pierces and breaks out of the trend line, as there is a huge bullish rally ahead.
- Few traders who want to earn quick profits, can enter the trade at the start of the bump and exit when the bump reaches its low. They can earn much more when there is a dual bump in the pattern, though the probability is less.