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 7 : REVERSAL GAP
Reversal gaps can be one of the strongest indicators of a reversal in trend. It is seldom false. Sudden strong change in sentiment is shown. Best indicator is when preceding action has shown narrowing of spread and drying up of volume.
Pattern 8 : PATTERN GAP
A pattern gap is one that has a gap in previous day’s close, but does overlap that day’s range. It is not as strong as an outright gap. The close should be in upper part of range above the previous day’s high.
Copyright 2015, John Hill & Futures Truth Company