What it looks like
A steep fall over several candles, a single turning point (often one candle with a long lower wick), then a steep rise that recovers most of the fall. There is no flat area or double low at the bottom, just a point. The tip of the V is the lowest low.
What it means
Whoever was pushing price down has gone, and buyers have arrived in force. That often follows news, a sweep of a key level or a forced exit by trapped traders. Because there is no base, there is no obvious place to buy before the move, which is what makes V bottoms hard. The first pullback that holds is the market's first test of the new direction.
How to trade it
- 1
Mark the tip of the V and let the recovery run; do not chase it.
- 2
Confirmation: a small pullback that stops well above the tip and a candle that turns back up.
- 3
Entry: buy as the pullback holds.
- 4
Stop: below the turn. Example on gold: fall from 4,060 to 4,010, recovery to 4,052, pullback to 4,040 that holds. Buy at 4,043, stop at 4,036 below the pullback, or 4,007 below the tip for the full pattern.
- 5
Target: the start of the fall at 4,060, then the next level above.
A close below the tip of the V.
Where it works best
After news spikes or obvious stop runs on gold and indices, where the reversal has a clear trigger.
WickSpeak spots V bottoms automatically and names them on the candles that made them. The note explains what it is, how to trade the first pullback and that a close below the tip proves it wrong. In Playbook you can use it as a condition in a play, alone or alongside other patterns and indicators (any of the 146 patterns can be a condition), and backtest it on past candles with your own costs.
Common mistakes
- Trying to buy the exact bottom while price is still falling.
- Chasing the steep recovery at the top of the move.
- Using a stop far below the tip for a small intraday trade, which makes the risk too large for the target.
Related patterns
Questions traders ask
What is a V bottom?
A sharp fall followed by an equally sharp recovery with no base between them. On the chart it looks like the letter V.
Why are V bottoms hard to trade?
They give no warning and no base to buy from. By the time the shape is clear, much of the move is done, so the safer entry is the first pullback that holds.
Where does the stop go on a V bottom?
Below the turn. For a pullback entry that can be below the pullback; the pattern itself is only proved wrong by a close below the tip of the V.
What causes V shaped reversals?
Usually news, a sweep of a level that triggers a burst of orders, or forced exits from traders on the wrong side. Whatever was pushing price down stops suddenly.