The pattern is defined by a sequence rather than a shape: a pullback of, say, 25 percent, then one of 12 percent, then one of 6 percent, with volume contracting through each leg. The tightening is the signal.
The rationale is that each wave removes weaker holders, so fewer shares are available to sell at the highs. The final contraction gives a very tight invalidation-level, which is why the approach can tolerate a modest win rate.
It shares the weaknesses of all base-building approaches: most breakouts from tight bases still fail, the pattern is judged partly by eye, and it works far better in markets already in uptrends than in broad declines. market-breadth context matters more than the base itself.
Related: consolidation, cup-and-handle, volume-dry-up, bollinger-squeeze, breakout