The Handbook of Technical Analysis + Test Bank_ The Practitioner\'s Comprehensive Guide to Technical Analysis ( PDFDrive )

Bar Chart Analysis

six generic triple price Bar reversal Formations

In Figures 7.6 and 7.7, we see six basic triple bar bearish reversal patterns occurring in

an uptrend. As a general rule, the larger the gaps, the more bearish will be the pattern

upon completion. Also, the larger the range of the first and third bars, the more reli-

able will be the reversal pattern. For most triple bar patterns, the middle bar usually

occurs on low volume, except possibly for pattern 1 where larger volume is also con-

sidered more bearish. This is because the buyers failed to keep the closing price near

or above the midpoint of the bar and instead allowed the sellers to drive price to close

at or near the low of the bar. A bearish three-bar pattern is generally considered more

reliable if the last bar is an overextended bar that closes at or near its low on high

Figure 7.5 Seven Basic Single and Double Bar Bullish Reversal Patterns.

Figure 7.6 Basic Triple Bar Bearish Reversal Patterns.