Updated on March 11, 2023
A V-pattern in technical analysis is used to signify the chart formation that resembles the letter “V” . It is characterized by a sharp reversal in the price trend of a security. The V-pattern usually occurs after a prolonged downtrend, where prices fall dramatically and then experience a rapid and sharp reversal, resulting in an upward price movement.
How is V Pattern interpreted?
The V-pattern is seen as a bullish reversal pattern and is often considered a strong signal for a potential trend reversal. It indicates that the selling pressure has diminished and that the bulls have taken control of the market.
How is V Pattern used?
V Patterns are used by traders in technical analysis who often look for signs of a V-pattern in order to identify potential long trading opportunities. Traders can use technical indicators, such as moving averages, trend lines, and momentum oscillators, to confirm the reversal and to identify potential entry and exit points for their trades.