Throwbacks and pullbacks are not new to securities, but if you don’t understand how price behaves, a losing trade may result.
Introduced by Thomas Bulkowski, the Bump and Run is a reversal chart pattern that forms after excessive speculation drives prices to advance too fast and too far. It is designed to identify advances or bumps that are created by speculation and therefore cannot be sustained for a long time.
I use chart patterns in my trading because they give me tips on how a stock will perform. Sometimes the tip turns out to be a lie, but that’s okay. I use stops to limit losses (don’t you?). When the tips are accurate, I clean up. This article discusses two such tips: partial declines and partial rises. They forecast the breakout direction from a chart pattern.