What defines the V-Top pattern?

The V-Top pattern is characterized by a sharp increase in price followed by an abrupt decline, resembling the shape of the letter "V." This pattern often occurs when the market sentiment rapidly shifts from bullish to bearish. In this context, "demand suddenly disappears after constant news coverage" accurately captures the essence of the V-Top. Here, investors may initially be driven by optimistic news but once the news becomes stale or the expected benefits are not realized, the demand can drop sharply, leading to a rapid price decline.

This phenomenon typically reflects a market that was once confident but quickly loses momentum, resulting in a steep reversal. As prices cannot hold their gains, the absence of new buyers leads to a significant drop, forming the "V" shape when plotted on a chart. Understanding this pattern is important for traders looking to recognize potential market reversals.