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The bump and run is a bullish reversal chart pattern.
How do you recognise it?
It usually forms in three stages:
- Price stays below falling resistance: before the pattern appears, price repeatedly rebounds without breaking through this line
- The decline accelerates: price falls sharply, forming the bump
- Price recovers and breaks resistance: after the drop, price rises back towards resistance. The pattern is confirmed when it finally breaks through, forming the run
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Don't confuse it with a V bottom, which forms a more direct, symmetrical V.
The bump and run first develops below falling resistance before reversing.
How do you trade a bump and run?
Chart traders usually wait for the break above resistance to enter long.
The stop-loss usually goes below the pattern's lowest point, with the take-profit at its previous high.
Note: there is also an opposite version, called the bump and run reversal.
