the hAndbook of technIcAl AnAlysIsthat the existing trend is up, with the reverse for bearish patterns. This is because
in order to be classified as a reversal pattern, trend sentiment must be in disagree-
ment with the pattern’s intrinsic sentiment or bias.
seven generic single and Double Bar Bullish and
Bearish reversal Formations
In Figure 7.4, we see various single and double bar bearish reversal patterns oc-
curring in an uptrend. As a general rule, a close below a previous bar’s close or
low is considered bearish, especially if the previous bar is a large or wide ranging
bar. Narrow range bars occurring within a two bar pattern should generally be
formed on low volume, indicating uncertainty in an uptrend. Large bars closing
at or near their lows should generally be formed on high volume in an uptrend.
(It should also be noted that some practitioners consider these patterns as con-
tinuation patterns when they occur in a downtrend.) In Figure 7.4 are the seven
basic single and double bar bearish reversal patterns commonly found in up-
trending markets. Similarly, a bearish two‐bar pattern is considered potentially
more reliable if the last bar is an overextended bar that closes at or near its low
on high volume.
In Figure 7.5, we see various single and double bar bullish reversal patterns
occurring in a downtrend. As a general rule, a close above a previous bar’s close or
high is considered bullish, especially if the previous bar is a large or wide‐ranging
bar. Narrow range bars occurring within a two‐bar pattern should generally be
formed on low volume, indicating uncertainty in a downtrend. Large bars closing
at or near their highs should generally be formed on high volume in a downtrend.
In most cases, a bullish two‐bar pattern is considered potentially more reliable if
the last bar is an overextended bar that closes at or near its high on high volume.
Figure 7.4 Seven Basic Single and Double Bar Bearish Reversal Patterns.