One-Day Reversals
This pattern is made of only one bar but it is critically important that it be placed at the proper point on the chart. After a rally, the market makes a higher high, but something happens during the day. All of a sudden, market sentiment shifts to the bears and the price ends up closing lower for a net loss on the day.
The converse is true at bottoms as the market makes a lower low but closes higher on the day. Both suggest that something has happened to change sentiment.
One-day reversals may sound like a short-term trading pattern but like most technical tools, they can be applied in many time frames. A one-month reversal would be an excellent tool for long-term investors.
Figure 10.6 shows a one-day reversal in Intel Corp. ...
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