Mark Minvervini’s VCP pattern is known to be a good breakout pattern. Its similar to the cup & handle pattern, when the cup & handle fails and if there’s a multiple handle like pattern appears while the contraction size reduced around half of the last contraction (something like first 20% contraction, then next contraction will be like 10-15% , then 3rd contraction becomes 5% and so on), Mark terms that as Volatility Contraction Pattern.
Also, if one see such patterns in 52w high, then the uptrend is likely to continue. And he calls that as a super performer in infancy.
I’ve followed that pattern and gave a try at consolidation breakout, all of them worked with gains ranging from 5-14% and then saw some bearish signals and exited. Stoploss for these pattern are the level of latest contraction bottom.
Exited upon evening star like pattern + RSI in overbought zone
After RSI hit overbought zone, stock struggled to move, again it hit overbought next in few days, so exited.
As anticipated, the breakout did happened, but the bad market pulled down. Didn’t buy as my order didn’t execute.
Expected to do another contraction, so entered at 710 and still holding.
Here the VCP setup is yet to complete, so need to be cautious.
Like Alkyl, another one setup which got breakout and spoiled by bad market.
Disc: Once the setup are invalidated it may not work, Not a buy/sell reco.