The Volatility Contraction Pattern (VCP) forms as volatility and volume shrink. It's a setup that signals a potential breakout—used by pros like Mark Minervini.
Why It Matters
Each contraction reflects fading selling pressure. Tighter price ranges show that supply is drying up.
The Setup
A strong VCP pattern includes:– 3 to 5 contractions– Decreasing volume– A tight base before breakout
The Breakout
Watch for:– Price breaking above the pivot– Volume spike (30-40%) This confirms institutional buying.
Psychology Behind VCP
– Fear fades with every smaller dip– Smart money accumulates quietly– Breakout triggers FOMO-driven surge
Real Risk-Reward
– Risk: 5-8%– Reward: 15-100%+ Why? Because breakouts from tight patterns are explosive and sustainable.
Mastering VCP is mastering discipline. Follow the price, trust the pattern—and ride the momentum.