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Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader
book

Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader

by Al Brooks
January 2012
Intermediate to advanced
576 pages
16h 41m
English
Wiley
Content preview from Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader

CHAPTER 2

Signs of Strength in a Reversal

Strong reversals have essentially the same characteristics of any strong move, like a strong breakout or a strong trend. Here are a number of characteristics that are common in strong bull reversals:

  • There is a strong bull reversal bar with a large bull trend body and small tails or no tails.
  • The next two or three bars also have bull bodies that are at least the average size of the recent bull and bear bodies.
  • The spike grows to five to 10 bars without pulling back for more than a bar or so, and it reverses many bars, swing highs, and bear flags of the prior bear trend.
  • One or more bars in the spike have a low that is at or just one tick below the close of the prior bar.
  • One or more bars in the spike have an open that is above the close of the prior bar.
  • One or more bars in the spike have a close on the high of the bar or just one tick below its high.
  • The overall context makes a reversal likely, like a higher low or lower low test of the bear low after a strong break above the bear trend line.
  • The first or second bar of the breakout has a close that is above the highs of many prior bars.
  • The first pullback occurs only after three or more bars.
  • The first pullback lasts only one or two bars, and it follows a bar that is not a strong bear reversal bar.
  • The first pullback does not hit a breakeven stop (the entry price).
  • The spike goes very far and breaks several resistance levels like the moving average, prior swing highs, and trend lines, ...
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Publisher Resources

ISBN: 9781118172308Purchase book