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.
See volatility contraction pattern (vcp) setups live →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.
Related terms
Get daily signals & real-time alerts.
StockSetups scans ~12,300 US stocks & ETFs after every close and sorts every long setup into four ranked lanes — each with a trade plan — plus an always-on engine firing 35+ real-time intraday alerts. Free for 7 days, no credit card.
Start free — 7-day trial, no card →Free daily signals by email. Top 3 setups per lane after every close. No account needed.
Unsubscribe anytime · Privacy