What is a bump and run pattern?
A bump and run chart pattern is a reversal pattern. It occurs after a large uptrend. With this pattern the stock will have a big run up on price. Eventually big investors began to sell. This causes investors to panic and a selloff of the stock will occur.
volumeVolume will typically be high when the uptrend is in place. When the price has a big bump upward, however, price will typically decrease. Volume will spike again when the stock breaks bellow support and the selloff begins. trading the pattern Professional traders may choose to short or do another bearish strategy when the stock breaks the support of the original uptrend. In this example many investors might have chosen to short this stock when it broke $5.25.
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