What it looks like
A steep rise over several candles, a single turning point (often a candle with a long upper wick), then a steep fall that gives back most of the rise. There is no flat top or double high, just a peak. The tip of the V is the highest high.
What it means
The buying that drove the rise has suddenly gone and sellers have taken over. It often follows news, a sweep above a key high or a squeeze running out of fuel. With no topping area there is no clear place to sell in advance. The first bounce that fails is the market's first test of the new direction.
How to trade it
- 1
Mark the tip of the V and let the drop run; do not chase it.
- 2
Confirmation: a small bounce that stalls well below the tip and a candle that turns back down.
- 3
Entry: sell as the bounce fails.
- 4
Stop: above the turn. Example on NAS100: rise from 25,400 to 25,600, fall to 25,450, bounce to 25,510 that fails. Sell at 25,500, stop at 25,525 above the bounce, or 25,610 above the tip for the full pattern.
- 5
Target: the start of the rise at 25,400, then the next level below.
A close above the tip of the V.
Where it works best
After news driven spikes or stop runs above obvious highs on indices and gold.
WickSpeak spots V tops automatically and labels them on the candles that made them. Each note says what it is, how to trade the first pullback and that a close above 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 sell the exact top while price is still rising.
- Selling the bottom of the steep fall instead of waiting for a bounce.
- Ignoring that some sharp drops are just a pause in a strong uptrend.
Related patterns
Questions traders ask
What is a V top in trading?
A sharp rise followed by an equally sharp fall, with no topping area between them. It looks like an upside down V.
How do you trade a V top?
Do not try to catch the peak. Wait for the first small bounce after the drop to stall, sell that, and place the stop above the turn.
What proves a V top wrong?
A close above the tip of the V. That means buyers have taken back the whole reversal.
Are V tops common on indices?
They often appear around news and the US open on US30 and NAS100, when fast moves and sudden reversals are more likely.