Tech Tip 1
2 Close Reversal
This pattern is used to judge the validity of an outside-day reversal. Most outside-day reversals (a high above previous day’s high AND low below the previous day’s low) are more significant than a plain key reversal. This gives them a higher probability factor, right from the start.
Tech Tip 2
There are several price patterns to which I pay special attention when they arise. Some of them, like the <em>2 Close Reversal</em>, are very common and are useful to know at any point in time. Others, like the topic of this discussion, appear with far less frequency even though they are extremely effective when they do appear.
Tech Tip 3
Double Key Reversal
This pattern appears commonly in the S+P — at significant turning points. One occurrence appeared in the S+P two weeks before the early-August 1997 high (and the largest correction in over 7 years that followed this pattern). It also occurred in early 1997 in the Silver market and identified a critical low in mid-January.
Tech Tip 4
This pattern carries much more weight if the trigger (fourth) day also closes below the third day’s low (outside day reversal) and/or the second day’s close (two closes prior). The latter of these filters — closing below the close of two days prior — leads into a very effective short-term pattern.