Reading Special Bar Combinations: Small Patterns
In This Chapter
Keying in on market psychology in simple bar combinations
Comprehending common and uncommon bars
Getting the lowdown on gaps
Understanding the significance of the high-low range
As I wrote in Chapter 6, the price bar is the basic building block of technical analysis. Bar configurations come in endless combinations and permutations, and you can't possibly memorize them all. But knowing about the special bars is useful because they can be powerful predictors — and everyone knows it.
“Special bars” are a small series of two to five bars — called combinations or configurations — that stand out on a chart. You can see them immediately, and so can everyone else. Most special bars and configurations are either trend-confirmation or trend-reversal patterns, but even when they are ambiguous, you need to sit up and take notice.