Topping Price Pattern - Bubble Top

Investors frequently bid up the price of a stock to unsustainable levels. Prices make new highs day and day, week after week and month after month. It seems prices will go up forever. People justify paying very high prices by saying "It's different this time."; so they pay more and more for the stock causing a price bubble to form. Eventually the buying binge ends and the price bubble bursts sending prices plunging to the downside.

Below is a bubble top chart of weekly closes from Quandl for Cisco (CSCO). After the bubble burst, the stock price remained well below the bubble high for years.

Related Articles

Introduction to Stock Price Patterns

Bottoming Price Pattern - Double Bottom

Bottoming Price Pattern - Reverse Head and Shoulders

Price Bubbles Always End Badly

Topping Price Pattern - Double Top

Topping Price Pattern - Head and Shoulders Top

Topping Price Pattern - Triple Top