Bump-and-Run Reversal (Bearish)

The Bump-and-Run Reversal Top (BARR Top) is a bearish reversal pattern described in detail by Thomas Bulkowski. It develops in two distinct phases:

• Lead-in phase: Price trends steadily higher along a modestly sloped support line. The move is orderly, sustainable, and supported by average volume.
• Bump phase: Price suddenly accelerates above the trendline, steepening its slope dramatically. Volume often surges. The bump height should be at least twice the distance from the lead-in trendline to the average price in that phase.
• Run phase: After peaking, price reverses sharply and falls back below the lead-in trendline, confirming the reversal.

The entire structure resembles a steep run-up (the bump) that becomes unsustainable, followed by a breakdown.

The BARR Top illustrates trend acceleration and exhaustion:

• Lead-in: A normal, healthy uptrend keeps participants confident. Buyers accumulate steadily, and sellers take profits in manageable amounts.
• Bump: Euphoria sets in. Latecomers chase the rally, driving price up at an unsustainable angle. Smart money uses this stage to distribute holdings into strength.
• Run: Once demand is exhausted, the steep trend collapses. Trapped buyers panic as price slices back through the lead-in line. Sellers dominate, and the prior uptrend is decisively reversed.

The psychology is classic: confidence → greed → fear.

Bulkowski’s research on BARR Tops:

• Downward break frequency: ~69%.
• Failure rate: ~10%.
• Average decline after breakdown: ~25%.
• Timeframe: Lead-in phase typically lasts weeks to months; bump and run unfold quickly afterward.
• Volume pattern: Expands sharply during bump, collapses during run.

This makes the BARR Top a reliable and profitable reversal setup.

Entry:

• Conservative: Short once price closes below the lead-in trendline.
• Aggressive: Anticipate reversal as slope steepens excessively.

Stop loss: Above the bump peak (conservative) or above last swing high.

Targets: Minimum = height of bump projected downward. Secondary = major support zones from the lead-in phase.

Invalidation: A sustained rally above bump peak cancels the setup.

• Too shallow: If bump is not at least twice the lead-in height, the setup is weak.
• Early shorts: Entering during the bump can be risky; prices may continue steepening longer than expected.
• Fake runs: Price may dip below lead-in briefly then recover; wait for confirmation.
• Angle of slope: Steeper lead-ins are less reliable — best setups have modest lead-ins followed by dramatic bump.

• If bump phase is small or poorly defined.
• If volume doesn’t surge during bump.
• If broader market trend remains strongly bullish.
• If breakdown occurs without momentum or volume confirmation.