{"id":34820,"date":"2011-11-20T17:11:00","date_gmt":"2011-11-20T11:41:00","guid":{"rendered":"index.php\/2011\/11\/20\/technical-analysis-of-the-financial-markets-ch-4-4\/"},"modified":"2011-11-20T17:11:00","modified_gmt":"2011-11-20T11:41:00","slug":"technical-analysis-of-the-financial-markets-ch-4-4","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2011\/11\/20\/technical-analysis-of-the-financial-markets-ch-4-4\/","title":{"rendered":"Technical Analysis of the Financial Markets: Ch 4"},"content":{"rendered":"

Last part of the review of the 4th chapter of John J. Murphy\u2019s Technical Analysis of the Financial Markets.<\/em><\/p>\n

Reversal Days<\/h3>\n

\"image\"<\/a>A reversal day<\/em> happens either at the top of an uptrend (top<\/em> reversal day) or at the bottom of a downtrend (bottom<\/em> reversal day). A top reversal day<\/strong> is the setting of an intraday high for the uptrend followed by a close below the previous day\u2019s close. A bottom reversal day<\/strong> is the setting of an intraday low for the downtrend followed by a close above the previous day\u2019s close. The wider the intraday range, the higher the probability of a near term trend reversal.<\/p>\n

A reversal pattern can form on monthly and weekly charts and usually bears greater significance compared a reversal day. <\/p>\n

Price Gaps<\/h3>\n

Price gaps are areas in the chart where no trading has taken place. There are three types of gaps:<\/p>\n

    \n
  1. Breakaway<\/strong>: the penetration of a resistance level usually occurs through a Breakaway Gap and signifies a major move. It occurs on heavy volume and upside gaps usually act as support levels. Its important that prices do not fall below these gaps during an uptrend.\n
  2. Runaway<\/strong>: formed after a trend is in play for a while (usually the halfway point), these are prices leaping upward on moderate volume. If these gaps are filled, then its usually a sign of weakness.\n
  3. Exhaustion<\/strong>: as the name suggests, it usually occurs at the end of a trend. After the identification of both the Breakaway and Runaway gaps, one should start expecting the Exhaustion gap. The filling of this gap during an uptrend is a bearish signal.<\/li>\n<\/ol>\n

    The Island Reversal Pattern\"image\"<\/a><\/h3>\n

    Sometimes, after an upward exhaustion gap, prices trade within a narrow range before gapping to the downside. This leaves the few days of price action looking like an \u201cisland\u201d and indicates a trend reversal that needs to be confirmed with the overall trend structure.<\/p>\n

     <\/p>\n

    Up Next: Chapter 5: Reversal Patterns<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Last part of the review of the 4th chapter of John J. Murphy\u2019s Technical Analysis of the Financial Markets. Reversal Days A reversal day happens either at the top of an uptrend (top reversal day) or at the bottom of a downtrend (bottom reversal day). A top reversal day is the setting of an intraday … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[815],"class_list":["post-34820","post","type-post","status-publish","format-standard","hentry","category-your-money","tag-technical-analysis","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/34820","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=34820"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/34820\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=34820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=34820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=34820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}