Learn / Buy and sell signals
Signal Reversed patterns
When a steady trend's first opposing signal matters most.
A Signal Reversed pattern is the first opposing signal after a long, orderly trend. When a stock has made one higher high after another, the first sell signal stands out, and vice versa.
Bearish Signal Reversed (a buy signal)
The rule: a series of at least seven columns with lower tops and lower bottoms, followed by an X column that rises above the previous X column's top, the first Double Top buy signal in the sequence.
The name describes what happened: the bearish sequence of signals has been reversed. After a long string of sell signals, the first buy signal shows sellers losing control.
Bullish Signal Reversed (a sell signal)
The rule: a series of at least seven columns with higher tops and higher bottoms, followed by an O column that falls below the previous O column's bottom, the first Double Bottom sell signal in the sequence.
After a run of buy signals, the first sell signal is a warning that demand may be fading.
Using Signal Reversed patterns
- These are early warnings rather than confirmed trend changes. Watch for follow-through, such as a break of the trend line.
- A Bullish Signal Reversed is often a good reason to tighten stops or take partial profits on a long position, even if you don't exit completely.
For education only. Nothing here is investment advice or a recommendation to buy or sell any security.