Over the next several days, we will publish Minor Reversal Patterns, as published in John Hill’s book, Technical and Mathematical Analysis of Trends in the Commodity and Stock Markets.
The reversal patterns listed are based on only several days of action. They can be very useful when used in combination with the overall chart pattern and when used with other technical tools. I will emphasize that these factors or formations used by themselves can result in trouble and lead to whip saw action. Also, market action may not be exactly as shown. There may be several more days of movement. My intention is to introduce new concepts.
Pattern 5 : DOUBLE BOTTOM/TOP
Bottom – On 3rd day, market opens off and may go slightly lower than 2nd day. It then reverses and closes higher than 2nd day’s high. The middle day is an inside day. It indicates the quality of the buying is better than the selling.
Top – Reverse of above.
Pattern 6 : TOP OR BOTTOM TAILS
Tails are formed by going into new high or low ground and closing lower or higher.
On top – it indicates supply coming in. First time it does this is not too significant. However, it indicates important supply if this happens a 2nd or more times. It is a greater sign of weakness if each successive tail is at a lower level and volume picks up. Same holds true for a bottom, only in reverse.
Copyright 2015, John Hill & Futures Truth Company