WHAT IS A BUMP AND RUN CHART PATTERN? The bump and run reversal bottom pattern is a spoon or a frying pan formation that follows a downtrend in prices until it lets off a large decline or a dip in prices. It describes a short-term reversal that is followed by an upward breakout. The pattern is similar to the cup-with-handle formation, although the latter does not depend on a prior downtrend in price. In terms of performance, tall and wide patterns do better than short or narrow price trends. Statistics show that after successful identification of the breakout, gains increase between 31-38%, with a low break-even rate of failure at 2%.
This pattern was discovered by Thomas Bulkowski in 1996. He was studying trendlines and how they can generate price predictions when he came up with them. Originally, he named it the bump and run formation (BARF), but such a nickname wouldnât fare well on Wall Street. Hence, the bump and run reversal pattern.
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