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Blow Off Top

Moneyzine Editor
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Moneyzine Editor
1 mins
January 8th, 2024
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Blow Off Top

Definition

The term blow off top refers to extraordinarily high trading volume in a single session that is associated with the end of an upward price trend. A blow off top can be seen in charts, and is used by technical analysts to predict price trends.

Explanation

Technical analysts study various market data with the hope this information will guide them in selecting securities. Two of these data include historical trading volume and security price trends. One of the predictors used to signal the end of an upward price trend is a blow off top, which is characterized by both a rapid increase in the price of the security as well as its trading volume.

The appearance of a blow off top can be the result of unsettling financial news as well as market speculation. A blow off top signals the end of a security's upward price movement and the beginning of a decline in price. This trend is characterized by the following:

  • A statistically significant spike in trading volume, oftentimes appearing in a single trading session.

  • A historical pattern of price increases, followed by a spike in price on the same day trading volume spikes.

  • The inability of the security to sustain the high price occurring earlier in the trading day.

Related Terms

  • Back Months (Forward Months)
    Back Months (Forward Months)
    The term back months refers to any set of futures contracts for a given commodity that expire in a month that is different than the front month. Futures contracts will have a number of dates in the future during which contracts will expire.
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  • Front Month (Near Month)
    Front Month (Near Month)
    The term front month refers to the expiration month of an active futures contract with the shortest time to maturity. The front month of a futures contract will vary with the contract's underlying asset.
    Moneyzine Editor
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  • Blow Off Bottom
    Blow Off Bottom
    The term blow off bottom refers to extraordinarily high trading volume in a single session that is associated with the end of a downward price trend. A blow off bottom can be seen in charts, and is used by technical analysts to predict price trends.
    Moneyzine Editor
    Moneyzine Editor
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  • Breakaway Gap
    Breakaway Gap
    The term breakaway gap refers to a significant gap appearing in the historical price chart of a security. Breakaway gaps signal the beginning of a new price pattern.
    Moneyzine Editor
    Moneyzine Editor
    November 6th, 2024

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