the hAndbook of technIcAl AnAlysIsinside Bars
Inside bars are considered reversal bars. For a more reliable reversal pattern, the
first bar should be as wide as possible, occurring on high volume, whereas the
second bar should be as narrow as possible, occurring on very low volume. In
Figure 7.25, we see two inside bars forming and testing the same resistance level.
The high of both inside bars 1 and 2 exceeded the upper Bollinger band, but
systematically closed below it, which is usually regarded as an indication of price
Figure 7.23 Bearish Island Reversal on the Daily Chart of Direxion Daily Gold
Miners Bear 3X Shares.
Courtesy of Stockcharts.com
Figure 7.24 Bearish Inside Day Reversal on the Daily Chart of ITC Holdings Corp.
Courtesy of Stockcharts.com