Volatility Contraction Pattern (VCP) Scanner
Scans Nifty 500 stocks matching Mark Minervini's Trend Template + tight price consolidation
VCP Filtering Criteria:
- Trend Template: Price > 150 & 200 SMA; 150 SMA > 200 SMA; 50 SMA > 150 & 200 SMA; Price is within 25% of 52-week High and >30% above 52-week Low.
- Contraction (T): Pullbacks are tightening. T1 (60-40 days ago range), T2 (40-20 days ago range), T3 (last 20 days range).
- Pivot Tightness: Latest range (T3) must be <= 10.0% representing a tight pivot consolidation.
- Volume Dry-up: The average volume of the last 5 days must be lower than the 20-day SMA of Volume (drying up selling pressure).
| Symbol ↓ | Company Name | Close Price | Today's % Chg | Pattern | Contractions (T1 → T2 → T3) | Volume Ratio (5d/20d) | Dist. to 52w High |
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Understanding Mark Minervini's Volatility Contraction Pattern (VCP) Scanner
The Volatility Contraction Pattern (VCP) is a signature chart structure identified by US Investing Champion Mark Minervini. It is a powerful technical analysis pattern that signals institutional accumulation. As a stock consolidates, its price fluctuations become progressively smaller (contracting) on decreasing volume, showing that sellers are exhausted and a massive breakout is imminent.
Key Components of the VCP Scanner:
- Minervini Trend Template: To qualify for a VCP setup, a stock must first meet strict uptrend criteria: close price above the 150 & 200 SMAs, the 150 SMA above the 200 SMA, the 200 SMA trending up for at least 20 days, and the price trading within 25% of its 52-week high while being at least 30% above its 52-week low.
- Contraction Waves (T1, T2, T3): The price range contracts from left to right. T1 (60 to 40 days ago) represents the first pullback, T2 (40 to 20 days ago) shows a shallower pullback, and T3 (last 20 days) represents the tightest pivot consolidation.
- Volume Dry-up (VDU): During the tightest contraction phase, daily volume should dry up significantly (below its 20-day average), indicating that floating supply has been completely absorbed by institutions.
How to Trade VCP Breakouts:
A buy order is placed just above the pivot resistance level of the final contraction wave (T3). The stop loss is positioned slightly below the low of the final tight consolidation area (usually within 3% to 5% of the entry price). This allows swing traders to enter with highly asymmetrical risk-to-reward ratios as the stock surges out of consolidation.
Disclaimer: This scanner is for educational and informational purposes only. The Volatility Contraction Pattern (VCP) indicators are calculated mathematically based on historical data. These signals do not constitute financial advice, buy/sell recommendations, or investment calls. Backtest results do not guarantee future performance. Stock trading is subject to high market risks; please consult a SEBI-registered financial advisor before making any trading decisions.