The V top is a reverse V-shaped top thus the name. The top is quite sharp. It’s due to the irrationality of actors leading to a steep increase that will be corrected shortly afterwards. The V top will occur most often in an upward trend and will often signal a trend reversal. It can also appear in a downward trend, like when in an economic announcement.
The neckline of the pattern is formulated by the lowest point before the formation of the reverse V.
The general objective of the V Top pattern is the distance between the neckline and the lowest of the reverse V that extended to the neckline.
Various criteria is used to identify a V top:
– The highest point of the reverse V is often formulated by a single candle, often with a long upper shadow that underlines the reversal willingness of investors.
– The sharp upward movement that forms the reverse V is led by a steep upward slant. The price will make any pause during the bullish movement.
– The angle of the line that leads the bearish reversal should be similar to the angle of the line that led the bullish downtrend.
– It is quite difficult to anticipate a V top.
– The interest of the pattern is in its reversal potential.
– The V top will often appear in a channel.