Trading Reversal Bars (RB) - Oliver Velez
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Description :
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A RB is marked by an initial and often sharp move in one direction followed by an abrupt turn, which ends in the opposite direction.
For e.g After initially dropping sharply to the downside, a bullish bar will turn and close at or near the periods high, above the opening price (open at 20, trading through the day at 18, and close at 20.50).
After rallying to the upside, a bearish reversal bar will turn and close at or near the periods low, below the opening price (open at 20, trading high upto 22, then reverses back to the downside to close at 19.50)
Interpretation :
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The presence of a RB signifies that a sharp turn or change of trend is close at hand.
A turn (rebound or decline) after an RB will tend to be more potent and reliable than a turn from a more normal bar.
RBs show where shakeouts (weak hands are taken off positions) have occurred.
The bullish RB indicates that control of the market has shifted from sellers back to buyers.
The bearish RB indicates that control of the market has shifted from buyers back to the sellers.
A bullish RB is most significant when it occurs after a several bar decline.
When a bullish RB occurs after a several bar decline, the master trader looks for the stock to turn to the upside.
A bearish RB is most significant when it occurs after a several bar advance.
When a bearish RB occurs after a several bar advance, the master trader looks for the stock to turn to the downside.
How to play the RB :
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The master trader looks to buy above the high of a bullish RB after a several bar drop.
The master trader looks to sell below the low of a bearish RB after a several bar advance.
The aggressive master trader often buys on the bullish RB just prior to close.
The aggressive master trader often sells short on the bearish RB just prior to close.
---------------------------------------
Description :
------------
A RB is marked by an initial and often sharp move in one direction followed by an abrupt turn, which ends in the opposite direction.
For e.g After initially dropping sharply to the downside, a bullish bar will turn and close at or near the periods high, above the opening price (open at 20, trading through the day at 18, and close at 20.50).
After rallying to the upside, a bearish reversal bar will turn and close at or near the periods low, below the opening price (open at 20, trading high upto 22, then reverses back to the downside to close at 19.50)
Interpretation :
---------------
The presence of a RB signifies that a sharp turn or change of trend is close at hand.
A turn (rebound or decline) after an RB will tend to be more potent and reliable than a turn from a more normal bar.
RBs show where shakeouts (weak hands are taken off positions) have occurred.
The bullish RB indicates that control of the market has shifted from sellers back to buyers.
The bearish RB indicates that control of the market has shifted from buyers back to the sellers.
A bullish RB is most significant when it occurs after a several bar decline.
When a bullish RB occurs after a several bar decline, the master trader looks for the stock to turn to the upside.
A bearish RB is most significant when it occurs after a several bar advance.
When a bearish RB occurs after a several bar advance, the master trader looks for the stock to turn to the downside.
How to play the RB :
--------------------
The master trader looks to buy above the high of a bullish RB after a several bar drop.
The master trader looks to sell below the low of a bearish RB after a several bar advance.
The aggressive master trader often buys on the bullish RB just prior to close.
The aggressive master trader often sells short on the bearish RB just prior to close.
