The principal difference between Day
Trading and other forms of trading is the time frame
Technical analysis assumes that prices move
in trends
Trends have a tendency to perpetuate
In technical analysis we are dealing in
probabilities, never certainties
Outside bars are reversal patterns that
indicate a change in sentiment
Inside bars indicate that prevailing
momentum has dissipated because buyers and sellers are now equally matched
The key reversal bar should be accompanied
by climactic volume
A very strong signal of a reversal in
sentiment
Characteristics
1.
Price opens the bar strongly in
the direction of the prevailing trend
2.
Trading range of the bar is
extremely wide
3.
Price should close at or close
to the previous close
Characteristics of Exhaustion Bars
1.
A wide trading range following
a sharp price move
2.
The close is higher than the
opening in a downtrend or the opening is lower than the close in an up trend
3.
The close is more than half way
up the bar in a down trend, and more than half way down in an up trend
4.
Pinocchio bars give us a false
impression of what is really going on
Martin J. Pring
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