In this video, Tim explains a point and figure charting pattern called the bearish signal reverse. Don’t jump to conclusions about this pattern because despite the word “bearish” being in its name, this is a very bullish pattern. While we don’t see this pattern frequently, it is a strong and successful one to play.
Characteristics of a Bearish Signal Reverse
– It must be seven columns wide to qualify
– Each column of X’s must be lower than the previous column of X’s
– Each column of O’s must continue lower than the previous column of O’s
– The chart reverses into X’s and gives a new double top buy signal to complete the pattern
The lower tops and lower bottoms made in the first part of the bearish signal reverse, indicate growing supply and waning demand. That’s the bearish signal. The bearish signal gets reversed when a new double top buy signal is made. The buy signal shows a change in the supply-demand relationship of the security. It tends to result in an explosive move to the upside.
Check out Tim in this week’s video. You’ll understand the pattern much better with a visual example.
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