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The reversal amount
Why the 3-box reversal is the standard, and what changes with 1 or 2 boxes.
The reversal amount is how many boxes price must move against the current column before a new column starts. It decides how much of a pullback the chart treats as a real change of direction.
The 3-box reversal: the standard
The classic method uses a 3-box reversal. With $1 boxes, a column of X's topping at $50 doesn't turn into a column of O's until price falls to $47. Anything less is treated as noise, and the X column simply waits.
The 3-box reversal has stayed the standard for more than 70 years because it strikes a good balance: sensitive enough to catch real turns, strict enough to ignore routine pullbacks. Nearly all the classic patterns and their published reliability are based on it.
1-box and 2-box reversals
- 1-box reversal charts change direction on any one-box move. They show every swing and are very detailed, but they generate many more signals and a lot of whipsaws.
- 2-box reversal charts sit in between. They're more responsive than 3-box charts without being as busy as 1-box charts.
Larger reversals
Some long-term charts use a 5-box reversal or more. These filter out everything except major trend changes.
How box size and reversal work together
The real filter is box size times reversal. A $1 box with a 3-box reversal needs a $3 move to reverse. A $0.50 box with a 3-box reversal needs only $1.50. When you compare charts, look at both numbers together.
| Box size | Reversal | Move needed to reverse |
|---|---|---|
| $0.25 | 3 boxes | $0.75 |
| $0.50 | 3 boxes | $1.50 |
| $1.00 | 3 boxes | $3.00 |
| $2.00 | 3 boxes | $6.00 |
Every pattern in this knowledge base is described for the standard 3-box reversal unless it says otherwise.
For education only. Nothing here is investment advice or a recommendation to buy or sell any security.