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VCP Pattern — Interactive Guide

Volatility Contraction Pattern explained with interactive examples

Methodology

What is a VCP?

The Volatility Contraction Pattern (coined by Mark Minervini) is a stock consolidation pattern where price swings progressively tighten over time, showing diminishing supply as weak holders exit.

Each contraction is smaller than the last (e.g., 25% → 15% → 8% → 4%), and volume dries up significantly on the final pivot, indicating exhausted sellers before a potential explosive breakout.

Ideal VCP Structure
→ Contraction 1 (~25%) → C2 (~15%) → C3 (~7%) 📈 Breakout
The VCP Rules

5 Key Characteristics

1
Contracting Price Range
Each consolidation swing is smaller than the previous — 3 or more contractions preferred
2
Diminishing Volume
Volume must shrink on each pullback — shows supply drying up
3
Prior Uptrend
Stock must be in a Stage 2 uptrend — minimum 30% rise before base
4
Tight Closes
Final pivot should have very tight daily/weekly closes
5
Volume Surge on Breakout
Breaking above the pivot must happen on 40%+ above average volume
VCP Maturity Stages
Stage 1
Early Contraction

1–2 contractions complete. Volume still elevated. Risk: too early.

Stage 2
Mature Setup

2–3 contractions. Volume drying up. Best entry zone approaching.

Stage 3
Pre-Breakout

3+ contractions. Very tight closes. Volume near zero. ACTION ZONE.

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