Concept of V-Bottom

V-Bottom is a steep reversal pattern that often appears at low points after a rapid and deep decline in the short term. Due to a large influx of buying at the bottom, it pushes stock prices up quickly. Because it resembles a V shape, it is called a V-Bottom.

Trading Strategy for V-Bottom

When the V-shaped reversal pattern is established, and the upward reversal segment is simultaneously accompanied by volume release, the explosive power of this reversal pattern, when viewed from the current medium to long-term low position, still has considerable upward space.

Entry Method for V-Bottom

During the formation of the V-Bottom, the short-term consolidation phase is a good time to enter by chasing the rise.

Characteristics of a Spike Top

Concept of Spike Top

The Spike Top is exactly the opposite of the V-Bottom; it is a reversal pattern from a rapid rise to a downward trend. This pattern often appears after a swift and significant rise in high price areas. Due to a noticeable weakening of buying power in high price areas, the selling pressure at high points significantly increases, triggering a rapid turnaround in the trend, forming a Spike Top.

Trading Strategy for Spike Top

The downward signals indicated by K-line price behavior or volume-price relationships are very likely to become signals for trend reversal, leading to a rapid decline. When a Spike Top pattern is detected in a high price area, one should sell short immediately instead of waiting for a rebound opportunity.

Entry Method for Spike Top

During the formation of the Spike Top, the short-term consolidation phase is a good time to sell short.

Characteristics of M-Top and Triple Top

Concept of M-Top

M-Top, also known as Double Top, is commonly seen at medium to long-term high points or during a decline. M-Top is a formation of a second peak, indicating that there is strong resistance at the high point, and the probability of a trend reversal is significant.

Concept of Triple Top

Triple Top refers to an additional upward probe based on the Double Top. Since the oscillation time here is longer, it often favors the accumulation of bearish forces, making the top more solid.

Trading Strategy for M-Top and Triple Top

If the amplitude is large, it is likely to evolve into a reversal; if the amplitude is small, it is mostly a consolidation phase during the decline. For M-Top, the second peak is a good time to sell high because the second probe at the high point will encounter strong resistance. Selling high and clearing positions become the mainstream behavior in the market. In contrast to the Triple Top, when probing the high point for the third time, the divergence between bulls and bears intensifies. The third peak is likely to trigger a breakout trend; therefore, it is not advisable to enter the market at the third upward probe. A better entry opportunity appears when breaking below the support level.