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

Bar Chart Analysis

characteristics occurring with the pattern. The bullish key reversal bar forms be-

low the lower Bollinger band, indicating an overextended or oversold condition

with respect to volatility. We also see the StochRSI at oversold. Both of these con-

ditions indicate a greater potential for a bullish reversal. Note also that the key

reversal bar closed near its high on extreme volume, indicative of a selling climax.

two Bar reversals

In Figure 7.17, we observe a typical two bar bearish reversal on the daily chart

of the TSX Composite Index. The first bar closes near its high while the second

closes near its low. It would be preferable if the two bars had wider ranges. We

Figure 7.14 Bullish Key Reversal Day on the Daily Chart of Apple Inc.

Courtesy of Stockcharts.com

Figure 7.15 Bearish Key Reversal Day on the Daily Chart of Apple Inc.

Courtesy of Stockcharts.com