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This site is currently inactive as I have decided to move away from exclusively trading Forex in 2010 and as such will not be taking on new coaching clients in this area.

 



I have resumed my focus on coaching as a stock market mentor where I run a success guaranteed stock trading mentorship program

 



Additionally, you can now get access to what I consider to be the best stock options trading alert service.

 



Of course I am biased and with a success rate fluctuating between 68.2% and 72.4% it is hard not to be biased.

 



If you do want to follow along with what I am doing every day you can get access to my dail stock market report 

 



Until next time


happy trading 


Mr Phil Newton or on LinkedIn Phil Newton trader

Reversal Bars

Reversal bars are quite simply a type of bar that suggests that price will reverse its current direction. The patterns are based on Japanese candle stick reversal patterns. Another way or slightly more common way of describing these reversal bars is to call it a Pin or Pinocchio bar. Personally I don't actually care what it it called I'm more interested in IF I can trade the pattern and make some money from it.

I look at several different types of candle stick patterns and generically call them reversal bars which then need to be pre-qualified. (more on that later)

In short I look at Hammers/Shooting stars, Doji'/Spinning Top, Dark Cloud Cover/Piercing lines, Engulfing pattern, Harami, and what I call a two bar spike which in candlestick terms the nearest thing is Marubozo (although I don't care if the bars have wicks on them or not).  This last one is what I call bar blending and If you blend one up bar and one down bar of equal magnitude then this is a 2 bar spike and blended together would look like a hammer/Shooting Star.

Ok Ive tried to be as precise as I can with the names of the candlestick patterns but as I've mentioned I don't really care what its called only what the market is potentially telling me.

The next part of the pattern I look for is to pre-qualify the Reversal Bar.

"Reversals happen at the end of a trend"

I therefore need to look for trending price action prior to the Reversal Bar. Personally, I'm very aggressive looking for these patterns and I look for two prior bars showing higher/lower bar lows/high. You can however filter these Reversal Bars further by looking for 3, 4, 5 or more pre-qualifying bars to indicate trending price action.

Reversal Bars with pre-qualifier, two bars prior to the reversal bars showing trending price action

Shooting Star/Hammer with pre-qualifier, two bars prior to the reversal bars showing trending price action

Short Trigger                                      Long Trigger

                               

Doji/Spinning Top with pre-qualifier, two bars prior to the reversal bars showing trending price action

Short Trigger                                      Long Trigger

                              

Two Bar Spike (a not quite Marubozo) with pre-qualifier, two bars prior to the reversal bars showing trending price action

Short Trigger                                      Long Trigger

                              

Dark Cloud Cover/Piercing line with pre-qualifier, two bars prior to the reversal bars showing trending price action

Short Trigger                                      Long Trigger

                              

Engulfing Pattern with pre-qualifier, two bars prior to the reversal bars showing trending price action

Short Trigger                                      Long Trigger