Monday, January 23, 2012
Reading weak reversal signals
2BR (b76,77) can be considered strong as long as the second bar takes out the first bar with a strong close and are of comparable size and not misaligned by more than 1t or 2t if shaved.
When a reversal signal that is poor has a poor entry bar (b28, b70), there is a good chance of continuation.
When the signal indicates a major change in direction (b11,b35), usually its a far safer option to take the first pullback in the new direction (b17,b43). When a signal is ambiguous, the chances of a pullback very soon after the reversal are high.