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Chapter Three - Crowd Psychology and Chart Reading
Section Two - Reversal Patterns (Excerpt)

Reversal patterns are most often single and double bar patterns that identify a likely turning point in market behavior. We use reversal patterns primarily on an intraday timeframe, most frequently on five minute charts. They will, however, work in just about any timeframe, and can be effectively applied on one minute charts during fast market conditions.

TD_02.GIFReversal patterns are oftentimes the trigger points used to enter and exit a trade. The ability to identify these patterns as they occur near important support and resistance levels is of critical importance in this method of day trading. They are the market's way of telling us "NOW!"

The Pattern Trapper method of day trading uses the occurrence of these reversal patterns near support and resistance levels as a trigger into our trades. Each one of the support and resistance levels discussed in Chapter One represent chart areas which have the potential for creating important shifts in market psychology. But, not every level creates a significant market reaction. The occurrence of price reversal patterns helps us distinguish those levels which have a greater likelihood of creating a reaction from those that don't.

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