Strictly Buy and Sell Set Ups Message Board - Msg: 20919678

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To: Ottrose who wrote (1628)	1/5/2005 6:44:31 PM
From: dabum3	Read Replies (1) of 13441

Ottrose, The 3-5 bar reversal works best on stocks that are in a strong uptrend. (Don't forget this important piece of information.) The 3-5 bar reversal can also be applied to a stock that is dropping off a recent price high such as the highest price over the last 20 trading sessions. The concept behind the 3-5 bar reversal is that in a strong uptrend, you get pockets of profit taking. These profit taking sessions usually last 3-5 days and then the upward trend continues until the next profit taking session. Often times, a 3-5 bar drop will also create a short term oversold situation and the short term trader will take advantage of the expected up move over the next few days. This pattern can be used in any time frame. Therefore, someone looking at a longer term trade can look for these same patterns on weekly and monthly charts. Day traders look for these same patterns on 5 and 15 minute charts. (You look for this pattern for the time frame in which you wish to trade. You don't look for 15 minute reversals and apply it to a 6 month holding position.) Here is the rest of the explanation. http://www.siliconinvestor.com/readmsg.aspx?msgid=20766476 Thanks for asking. It allowed me to expand on the original explanation. dabum

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