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From the chart it looks like it is just a 50% PB. How is this a reversal? I can't tell the difference between it and a PB.
Hi Travis,
Two ways to think about it:
1) follow the sequence with your eyes as in "it went down, and then it went up just as much"
2) more technically, start with the open price of the first bar, end with the close price of the last bar of the "2 bar reversal" or "5 bar reversal" and imagine merging those bars into 1. That's how the bar will look on some HTF. It will have a big tail on the bottom (price went down) but a bull body closing somewhere above midpoint (it reversed back up). Hence a reversal.
You're right, it may also be a 50% PB at the same time. But for the purposes of this exercise we're not looking at bars to the left, only at what this current sequence of bars did: "price went down, and then it went back up" or vice versa.
Hope this helps,
CH
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Thanks so much. This clears it up.
