2.2. HIGH-LOW-CLOSE CHARTS (BAR REVERSAL)
2.2.1. UPWARD BAR REVERSAL :
There are two types of upward bar reversals. They are
An upward bar reversal would signify that the scrip tried to sell off on the day of the upward bar reversal and posted a lower bottom but at the close of the session there was either bear covering or buying support that resulted in a reversal of the trend. Logically one would expect this buying pressure or bear covering to continue on the following day as well. If this occurs on the weekly or monthly bar chart it could be a signal of change in either the intermediate or the primary trend.
Also, an upward bar reversal is all the more powerful if it occurs at the lowest point posted by the scrip in the ongoing downward reaction. Many technical analysts consider an upward bar reversal to be meaningful if it occurs when the oscillator charts are in the oversold zones or when they exhibit a positive divergence in the oversold zone.
2.2.2. DOWNWARD BAR REVERSAL :
There are two types of downward bar reversals. They are
A downward bar reversal signifies the exhaustion of an up move. It would indicate that on a particular day, the scrip tried to move up but encountered either profit booking or selling pressure towards the close of the session and turned downwards. Logically, here also, the downward move would be expected to continue on the following day as well. If this occurs on the weekly or monthly bar chart it could be a signal of change in either the intermediate or the primary trend.
Also, an downward bar reversal is all the more powerful if it occurs at the highest point posted by the scrip in the ongoing rally. Many technical analysts consider an downward bar reversal to be meaningful if it occurs when the oscillator charts are in the over bought zones or when they exhibit a negative divergence in the oversold zone.
2.3. MOVING AVERAGES
The following figures illustrate the buy and sell signals when moving average curves (SMA or EMA) are drawn.
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