As for the increased volatility at a top, one good example is the 3 places I'll short a H&S top and the one I won't. This is a chart from one of the core shorts we have , HLF and here's the link if you are interested in more...HLF Position Management / Possible New Trade Set-Up
A good example of the transition from stage 4 decline back to a stage 1 base is what is known as "Capitulation" or a mass selling event. This is typically a large "Exhaustion" gap down on huge volume. This marks the end of the Decline phase, although price often drifts lower over a period of time before starting to build a new base. OFten just before capitulation you'll see a near vertical drop, much like a blow-off top might look like.
You have to keep in mind that everything is relative to its proportionality or scale so you wouldn't see a +25% move in the market here/tomorrow like we did in HLF which was a much larger topping pattern.
The Bearish engulfing candle I proposed last night in the Daily Wrap would be a great opportunity not only from an entry point of view for a put position, but from a volatility/signal point of view, although that may be asking a little too much with what we have to work with.
Check last night's post linked above for the proposal of a Bearish Engulfing Candle that I would have loved to see today. The chart I drew as an example from the post last night is below, just keep in mind that is as of yesterday's close, but the concept is still the same.
"The Dominant Price Volume Relationship today was in everything but the Russell 2000 as usual. The Dow had 18 stocks, the NDX had 76 and the SPX had 276. Confirming there was no oversold condition even on an intraday basis, the Dominant Price/Volume Relationship was Close Down/Volume Down, the least biased of the 4 relationships which has earned it the nick-name, "Carry on" as in keep doing what you were doing which was selling off at the close.