Investor’s Library: Fundamental Analysis, Technical Analysis, and Income Investing (Collection)

Chapter 5 Reversal Pattern Analysis

So much of charting is involved with reversal recognition. As the entry and exit point for the majority of technical strategies, reversal is more widely acknowledged as an important signal than continuation patterns. When you see a continuation indicator, the prescribed action is to take no action; technicians are likely to exhibit much greater interest in identifying the best times to enter and to exit. This is how profits are maximized and losses avoided.

In earlier chapters, some basic reversal patterns were explained and demonstrated in charts. However, recognizing a reversal pattern and then analyzing it are not the same process. The analysis should include judgment about whether the signal is true or ...