Bump and Run Pattern

What is a bump and run pattern?

A Bump and Run pattern is a bearish reversal pattern that happens after prices rise too far, too fast.

Download our free chart patterns PDF for a guide to 20 classical chart patterns with over 100 interactive charts, also on TradingView.

Duration

A bump and run pattern usually unfolds over several months.

Characteristics

This pattern consists of three phases: the Lead-in, the Bump and the Run.

1. Lead-in: this initial phase starts with a moderate uptrend, sloping upwards generally by 30 to 45 degrees. It should be neither too flat, nor too steep, and last at least one month.
2. Bump: this phase marks an acceleration in the uptrend. The slope of the trendline should be approximately 50% greater than during the Lead-in, between 45 and 65 degrees in this case. This phase, driven by speculative excess, ends in a 'blow-off top'.
3. Run: this phase begins when the price falls below the trendline formed by extending the Lead-in. Once the Lead-in trendline acts as resistance rather than support, the price is likely to fall lower.

Trading volumes

Trading volumes generally accelerate during the Bump, pushing prices up into a blow-off top. Volumes may also spike as the price touches and ultimately breaks below the Lead-in trendline.

Bump and run trading tips

Wait for the price to break convincingly below the Lead-in trendline before opening a short position. This break should ideally happen on higher than average volumes. Some traders wait for an unsuccessful retest of the trendline before opening a short position. This means waiting for confirmation that the trendline acts as resistance, rather than support over several trading sessions.

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