WAAREERTL VCP - The Concept and its formation This is educational article to show how VCP , Volatility Contraction pattern development and its breakout .
The Volatility Contraction Pattern (VCP) is a technical chart pattern often used in share trading to identify stocks that are preparing for a breakout.
Here i used the stock WAAREE renewable Technologies as an example- This is not a buy sell recommendation - only for study purpose .
This stock corrected for almost 50 % from All-time high .
Phase reversal started from 07 August 2024.
I split the screen into two sections to explain the concept .
Left side screen
1. VCP-1 20% , VCP-2 11 % and VCP -3 6% - a clear Contraction in Volatility.
Right side screen
2. Steep reduction in volume - see yellow triangle
3. Lower High formation - see violet trendline
4. Volume profile 2.33 M /2.06M (buy/sell)from 7Aug to 12 Sep
5. See RSI bottom level lower high formation
And the result is 25% profit within 5 trading days
This is a classical example for VCP breakout .
I hope this concept will help us in identifying similar breakouts in other stocks -
Note : Both sections , i used the same candles from 7Aug to 12 Sep . Left side screen made little elongated to visualize VCP formation more clearly
disclaimer :This is not a buy sell recommendation - only for study purpose .
