Two strong downside days point the direction of the market as possibly down. The one-day rally is ineffectual with a narrow range pattern. One might enter a stop sell below the NR day with an objective at least equal to the two-day period. If this two-day action is at a major support point, shorting is risky and should probably be passed.
When market is moving aggressively up in new high ground and two actions take place, it is time to move stop in tight or take profits.
1. A strong reversal day or down day.
2. An NR inside day bounce.