Volatility Contraction Pattern (VCP)
Also called: VCP
A base of progressively tighter pullbacks on shrinking volume that coils a stock before a breakout — Mark Minervini's signature setup.
The VCP, coined by Mark Minervini, describes a base where each successive pullback is shallower than the last — say 25%, then 12%, then 6% — as volume dries up. The tightening swings (the 'contractions') show supply being absorbed and sellers running out, leaving a tight pivot just below resistance.
The breakout through that pivot on a volume surge is the entry. Counting the contractions and watching volume contract into the pivot is the core of the read — a clean VCP is among the highest-quality setups in momentum trading.
On StockSetups
VCP-style tightening is exactly what several StockSetups fields are built to catch: the NR7/NR4 narrow-range and tight-closes flags, the Bollinger/TTM squeeze with days-in-squeeze, and the Minervini trend-template score all surface coiling names before the pivot breaks.
Frequently asked
Who created the volatility contraction pattern?
Mark Minervini popularized the VCP as part of his SEPA methodology. It describes a base of progressively tighter pullbacks on declining volume that precedes many of the strongest breakouts.
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