Double Bar ReversalTechnical Analysis
Double Bar Reversal patterns contain 2 bars. The first bar in a Double Bar Reversal pattern opens near the close of the bar before it. This bar will confirm the previous trend, closing toward the top if in an uptrend or towards the bottom if in a downtrend. The second bar opens close to the first bar’s close, but this bar will be the reversal which turns against the trend. This bar often cancels most or all of the first bar’s progress in the trend.
The second bar’s significance is derived from what it represents: a change in psychology regarding the asset and its ability to continue the prior trend. The second bar might represent a barrier to price moving forward. It can be a support level in a downtrend or a resistance level in an uptrend. Your first step should be reviewing previous levels of support or resistance to see if this is a common area for historical price reversals.
Your second step should be reviewing other parts of price action. Spiking volume during the second bar, helps indicate the seriousness of the trend reversal and helps establish it as a future support or resistance point. High volume across both bars indicates an increase in the volatility levels which have created the movement.
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