Scanner interpretation
VCP describes a leadership-base structure where each pullback becomes smaller than the prior pullback. The scanner studies whether volatility is contracting while price holds near a pivot area.
The pattern is not just a tight range. It is a sequence of contractions that suggests supply may be drying up while relative strength remains constructive.
- Leadership or constructive trend context
- Successive smaller contractions
- Volume dry-up
- Clear pivot and base-low invalidation
Quality model
Higher quality VCP candidates usually hold in the upper part of the base, show declining volume into the pivot, and keep relative strength stable or improving.
The candidate weakens when volatility expands downward, contractions become disorderly, or price loses the base low.