Go to Jeff Salisbury LWGate Home Page.From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
Subject: RE: [CANSLIM] Reversal Bars
Date: Fri, 26 Apr 2002 10:39:23 -0500
Previous Article (by Date): Re: [CANSLIM] Reversal Bars Chazmoore@aol.com
Top of Thread: RE: [CANSLIM] Reversal Bars "Hill, Ernie"
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Charley,
The idea behind the reversal bar is this. During the day sellers are winning
the battle driving the price down thus lower highs and lower lows than the
previous day. At some point the selling dries up and the buyers take control
thus causing the price to go up. If the buying is strong enough for the
price to close in the top half of the bar then it is considered a reversal
bar.
If a stock or index closes in the top third of the bar it is considered to
be a much better indicator than if it only closes in the top half. If the
open is in the top third of the bar that also makes for a better reversal
bar, because it indicates that selling pressure was more likely to have been
sustained as opposed to just a big gap down open.
Another important factor in reading reversal bars is the volume. A
significant increase in volume is an additional indicator that the selling
may have been exhausted.
My discussion above was specific to a long reversal bar, there also short
reversal bars. A short reversal bar is exactly the same except it occurs at
tops and has higher highs and higher lows and closes in the lower half of
the bar. The long reversal bar obviously occurs at bottoms.
Like every other technical indicator by itself reversal bars don't mean
much, but if you are expecting a trend change because of other analysis then
a reversal bar can be very useful. When an abnormally high number of
individual stocks have a reversal bar in any one given day the technician
should be alert for a possible change in trend.
E
- -----Original Message-----
From: Chazmoore@aol.com [mailto:Chazmoore@aol.com]
Sent: Friday, April 26, 2002 9:12 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] Reversal Bars
Ernie:
Would you mind expanding a bit on reversal bars? Intuitively, it would seem
that an increase in reversal bars would indicate a further market decline.
Charley
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<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Charley,<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>The idea behind the reversal bar is th=
is.
During the day sellers are winning the battle driving the price down thus l=
ower
highs and lower lows than the previous day. At some point the selling dries=
up
and the buyers take control thus causing the price to go up. If the buying =
is
strong enough for the price to close in the top half of the bar then it is
considered a reversal bar.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>If a stock or index closes in the top
third of the bar it is considered to be a much better indicator than if it =
only
closes in the top half. If the open is in the top third of the bar that also
makes for a better reversal bar, because it indicates that selling pressure=
was
more likely to have been sustained as opposed to just a big gap down open.<=
o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Another important factor in reading
reversal bars is the volume. A significant increase in volume is an additio=
nal
indicator that the selling may have been exhausted.<o:p></o:p></span></font=
></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>My discussion above was specific to a =
long
reversal bar, there also short reversal bars. A short reversal bar is exact=
ly
the same except it occurs at tops and has higher highs and higher lows and
closes in the lower half of the bar. The long reversal bar obviously occurs=
at
bottoms.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Like every other technical indicator by
itself reversal bars don't mean much, but if you are expecting a trend
change because of other analysis then a reversal bar can be very useful. Wh=
en
an abnormally high number of individual stocks have a reversal bar in any o=
ne
given day the technician should be alert for a possible change in trend.<o:=
p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>E<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DTahom=
a><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b> Chazmoore@aol.com
[mailto:Chazmoore@aol.com] <br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Friday, April 26, 2002=
9:12
AM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> </span></font><st1:Perso=
nName><font
size=3D2 face=3DTahoma><span style=3D'font-size:10.0pt;font-family:Tahoma'=
>canslim@lists.xmission.com</span></font></st1:PersonName><font
size=3D2 face=3DTahoma><span style=3D'font-size:10.0pt;font-family:Tahoma'>=
<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] Rever=
sal
Bars</span></font><o:p></o:p></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 face=3D"Time=
s New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'>Ernie: <br>
Would you mind expanding a bit on reversal bars? Intuitively, it would seem
that an increase in reversal bars would indicate a further market decline.
Charley</span></font><o:p></o:p></p>
</div>
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Previous Article (by Date): Re: [CANSLIM] Reversal Bars Chazmoore@aol.com
Top of Thread: RE: [CANSLIM] Reversal Bars "Hill, Ernie"
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