V Shape Formation
Formation V belongs to the formation of the reversal of the
trend. This formation begins with a sharp and strong decline, followed by an
equally violent turn and strong reflection, usually due to the appearance of
some unexpected news, which causes the formation to take the shape of the
letter V.
The difficulty in the formation of V shape is that this pattern arises without a transitional period and it is hard to capture it before its
creation. Often the only herald to confirm the occurrence of it is a turning point
by a very large volume.
The indication of the extent of the increase /
decrease on the basis of this formation is also somewhat difficult to determine. It can be
said that V patterns are usually recognized after the fact, but then it is
too late to open positions based on them.
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