ch2.pdf - P1 OTA JWBT597-c02 JWBT597-Brooks December 7 2011...

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C H A P T E R 2 Signs of Strength in a Reversal S trong 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). 79 Trading Price Action Reversals: Technical Analysis of Price Charts Bar by Bar for the Serious Trader By Al Brooks Copyright © 2012 by Al Brooks
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80 TREND REVERSALS: A TREND BECOMING AN OPPOSITE TREND The spike goes very far and breaks several resistance levels like the moving average, prior swing highs, and trend lines, and each by many ticks. As the first bar of the reversal is forming, it spends most of its time near its high and the pullbacks are less than a quarter of the height of the growing bar. There is a sense of urgency. You feel like you have to buy but you want a pull- back, yet it never comes.
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  • Fall '15
  • English-language films, bars, reversal, Donnelly

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