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Hi all! Just joined this community and I have a question if you guys dont mind!
Regarding Video 08B, I dont really understand what exactly is a reversal. Like are there certain rules that characterize reversal bars?
Take for example timestamp 15.21 for the 2 bar reversal and 16.32 the multibar reversal
Do the reversal bars just have to be more than 50% of the previous opposite directions move in order for it to be considered a reversal?
Sorry if its a dumb question would just like to clarify before I start misunderstanding something. Thanks!!
Another example would be at 18.35. Why is the 15minute chart considered a reversal bar?
Like are there certain rules that characterize reversal bars?
Do the reversal bars just have to be more than 50% of the previous opposite directions move in order for it to be considered a reversal?
The main rule for a bar to be considered a "reversal" type bar is it should close above midpoint for bull reversal bars or below midpoint for a bear reversal bars.
After that we consider the strength of the reversal bar: for bulls, a bar closing without upper tail (shaved top) is the strongest, then taily bull bars with bodies, then dojis closing in upper half, then bear bars closing in upper half are weakest; but all these carry a bullish bias.
At 15:21 Al calls out a two bar reversal because if you merge them on a higher timeframe that bar closes above its midpoint following a bear move. You can think of them as a single reversal attempt in time, the reversal attempt took longer than 5 minutes to fully manifest.
For the 16:32 multi-bar reversal considerations, you have to practice imagining a couple bars merged on a higher timeframe. For example, three 5 minute bars are basically a single 15 minute bar. If that bar closes below its midpoint then you can think of all three 5 minute bars as being a single "reversal" attempt. You start by considering the open of the first bar and the close of the last bar and imagine what it would look like on some higher timeframe (without actually switching charts).
At 18:35 it's a reversal bull bar on 15M chart because it closed above its midpoint after following a bear move.
So in this introductory video, Al only focuses on identifying the very first bars that attempt to reverse what's been happening before.
Hope that helped!
CH
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I see! Thanks so much Mr Carpet really appreciate the detailed response! Thank you and have a good day!
