Bump-and-Run Reversal (Bullish)

The Bump-and-Run Reversal Bottom (BARR Bottom) is the bullish counterpart, marking the end of a downtrend. It has the same three phases:

• Lead-in phase: Price trends steadily lower along a gently sloping resistance line. Volume is average, sentiment bearish but orderly.
• Bump phase: Price accelerates downward at a much steeper angle. Fear escalates, and volume often spikes. The bump should be at least twice the height of the lead-in decline.
• Run phase: Price bottoms, then reverses sharply upward, breaking above the lead-in resistance line. This confirms the reversal.

The structure looks like a panic-driven extension that collapses under its own weight before flipping bullish.

The BARR Bottom reflects capitulation and trend reversal:

• Lead-in: A controlled downtrend persists. Sellers dominate but without panic.
• Bump: Fear intensifies, often on negative catalysts. Late sellers rush in, driving steep declines. Smart money begins quietly buying into this fear.
• Run: Supply is exhausted, and price rebounds violently. Shorts are forced to cover, adding fuel. Once the lead-in line breaks, buyers gain confidence, marking a new bullish phase.

The psychology mirrors panic → despair → relief.

Bulkowski’s research on BARR Bottoms:

• Upward break frequency: ~72%.
• Failure rate: ~8%.
• Average rise after breakout: ~34%.
• Timeframe: Lead-in often lasts weeks to months; bump and run happen quickly.
• Volume: Expands during bump, confirming panic selling, then contracts and flips during recovery.

This makes the BARR Bottom one of the stronger bullish reversal setups.

Entry:

• Conservative: Buy once price closes above lead-in resistance.
• Aggressive: Enter near bottom if capitulation signals (volume climax, exhaustion wick) appear.

Stop loss: Below bump low (conservative) or below last swing low.

Targets: Minimum = bump height projected upward. Secondary = major resistance from lead-in phase.

Invalidation: Breakdown below bump low after reversal attempt negates setup.

• Too shallow bump: Without a dramatic steepening, the setup is unreliable.
• Early longs: Entering too soon during the bump risks catching a falling knife.
• Weak volume: If panic selling is absent, reversal odds decline.
• Extended bases: Sometimes bumps drag on sideways; patience is required for confirmation.

• If bump is small or slope not much steeper than lead-in.
• If no capitulation volume spike is visible.
• If broader market is strongly bearish, suppressing reversal attempts.
• If breakout above lead-in line lacks conviction.