Running summarizing tools on a new article

Check the paper below, then start its synthesis.


Signs of Strength in a Reversal

Al Brooks

DOI: 10.1002/9781119202622.ch2 (Economics, Econometrics and Finance)
License: not stated (all rights reserved)

Abstract: Strong reversals have essentially the same characteristics of any strong move, like a strong breakout or a strong trend. This chapter presents the characteristics that are common in strong bull reversals and strong bear reversals. Some of the characteristics common in strong bull reversals include the presence of a strong bull reversal bar with a large bull trend body and small tails or no tails; the next two or three bars having bull bodies that are at least the average size of the recent bull and bear bodies; the growth of spike to 5 to 10 bars without pulling back for more than a bar or so, which reverses many bars, swing highs, and bear flags of the prior bear trend; and one or more bars in the spike having a low that is at or just one tick below the close of the prior bar. The characteristics common in strong bear reversals include the presence of a strong bear reversal bar with a large bear trend body and small tails or no tails; the next two or three bars having bear bodies that are at least the average size of the recent bull and bear bodies; and the growth of spikes to 5 to 10 bars without pulling back for more than a bar or so, which reverses many bars, swing lows, and bull flags of the prior bull trend. Some reversals result in trend reversals, whereas others simply result in small countertrend swings. Carefully analyzing the price action before and after the reversal helps traders gauge how much if any of their position they should swing and how big a move to anticipate.

Published on 02 Jan. 2012