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Bar Chart Analysis

exhaustion. We also see bearish divergence occurring between the StochRSI and

the inside bar at Point 2.

In Figure 7.26, we see three successively lower inside bar formations occur-

ring on the daily chart of Silver Wheaton Corporation. Each inside bar formation

was formed below the Bollinger band, indicating potential price exhaustion, and

especially so if the declines were also accompanied by bearish volume. We also

see a bearish outside bar forming in late August 2013, after which prices declined.

Figure 7.27 depicts inside and outside bars occurring on the daily chart of Al-

acer Gold Corp. Notice that the bullish and bearish patterns line up perfectly with

the stochastic oscillator overbought and oversold indications.

Inside bars are somewhat related to their Japanese candlestick equiva-

lent, namely the Harami pattern. All outside bars may be regarded as Japanese

candlestick engulfing patterns but not all inside bars are regarded as Harami

patterns. It is a question of internal proportions. A Harami requires that the

Figure 7.25 Bearish Inside Day Reversals on the Daily Chart of ITC Holdings Corp.

Courtesy of Stockcharts.com

Figure  7.26 Inside Day Bullish Reversals and Outside Day Bearish Reversal on the

Daily Chart of Silver Wheaton Corporation.

Courtesy of Stockcharts.com