Chart Patterns by Bruce M. Kamich

Author:Bruce M. Kamich
Language: eng
Format: epub
Publisher: Wiley
Published: 2010-05-07T04:00:00+00:00

The V Bottom

A spike, or V bottom, is a nerve-wracking pattern. In most of the other reversal bottoms, there is a progressive movement from down trend to base to up trend, but with the V bottom, there is no shift. The V-bottom pattern starts with a down trend, which often is fairly sharp and can be extensive. The news about this stock or commodity is probably negative and well covered in the press. Prices decline and decline until a pivot point is reached. This pivotal low can be a one-day key reversal or a two-day reversal (more on reversals in Chapter 11). Prices don’t stay in this area for more than a few days.Volume will increase significantly and can be the heaviest if there is a selling climax day. A selling climax will have heavy volume and mark the end of the down trend. This climax might only be seen in retrospect unless one is closely following this security on a daily basis. See Figures 5.14 and 5.15.

FIGURE 5.14 A V bottom on Yamana Gold

Source: Bloomberg

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