"V-Top" and "V-Bottom" are extreme patterns that are easy to spot in a chart. "V-top" patterns
(Inverted V) ascending market action and angle of ascent is very sharp with increased volume.
Once a top is made, a sharp price reversal occurs and the descending angle usually will mirror
the ascending angle. There will be clear signs at the top (A Dark Cloud or Island Top pattern)
before a reversal can occur. Most of the time, prices will retrace all the way down to the start
of the rally to make it a true (inverted V) "V-top" formation.
Although the pattern is easy to spot, trading opportunities are challenging due to its steep
ascent and the fear associated with it. A trend line is drawn connecting the swing lows in a VTop
pattern. A breakdown below this trend line offers a potential opportunity to short.
Trade: Connect "swing lows" in the ascent of "V-top" pattern. A close below the trend line
signals a breakdown. Enter a "short" trade below the low of the breakdown bar.
Target: After price reversal, "V-top" patterns tend to travel in the similar angle as the ascent
angle. A target is set at the "swing low" of the pattern before the rally.
Stop: Place a "stop" order above the close of the trend line. A longer-term stop would be
