TWO-BAR REVERSAL
What does it look like?
The two-bar reversal pattern is made up of two strong bars closing in opposite directions.
The bullish variant consists of a strong bearish bar followed by a bullish bar. Reverse the order to get its bearish counterpart.
What does it mean?
Every reversal pattern works on the same premise. A clear rejection of a downward thrust is a bullish reversal, and a clear rejection of an upthrust is a bearish reversal.
In this case, the first bar represents the first thrust, and the second bar represents its rejection.
How do we trade it?
- For bullish reversals, buy above the highest point of the two-bar pattern.
- For bearish reversals, sell below the lowest point of the two-bar pattern.
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