Tuesday, February 14, 2012
When reversal bars dont trigger
Shallow sloped, wide channels fool even the best traders into thinking a reversal is just around the corner. There are some ways to guess if a reversal would fail and one of them is that a reversal bar with a strong close refuses to trigger. Today for example, b9, b18,b45 refused to trigger despite having strong closes. This usually means that sellers are selling the close of the strong bar instead of buying it. It also shows lack of confidence on the buyers side and you should look for continuation trades in the original direction.
An overshoot of the TCL and a strong signal such as the oio at b73 is an essential requirement to take a reversal trade with any hope of success.