VCP case study: reading the coil
A worked example of volatility contraction before a breakout.
Setup
A leading stock forms 3–4 contractions inside a base. Each pullback is shallower than the last. Volume fades into the pivot.
What we measure
- Base depth (% from high to low of base)
- Weeks in base
- RS rank vs universe
- Distance from pivot at today's close
Outcome
Not every VCP breaks out. The edge comes from many attempts with strict stops and occasional large winners.