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Step 2: Improve Attention to Detail (Price Reversal Tops)

by Erik Grywalski

Note:  The historical stock examples given below are for EDUCATIONAL USE ONLY.  They ARE NOT to be used to make buy/sell decisions in today's market.  For more information, please read the HSR Terms of Use.

Price reversals are a sign of selling into strength, but when they occur on record volume and/or wide range they can cause a stock to reverse trend.

Record volume is a week where trading volume is the heaviest of the uptrend or the highest in a stock's history.

Over the years, Wide Range Price Reversals (WRPR) have signaled tops in many stocks.

Price will often fail when it tries to surpass a Wide Range Price Reversal bar.

Here are five (5) topping scenarios that may unfold following a WRPR in a stock:

1.  Long-term Topping Process

Price forms a base over many months that fails as it attempts to break out above the price reversal bar.

Historical Stock Chart Example:  Taser (TASR) 2005

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2.  Breakout, Rally and Fail

Price breaks out above the price reversal bar and rallies 10-50% before breaking down.

Historical Stock Chart Example:  Amcol (ACO) 2004

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3.  Higher-high and Fail

Price just exceeds the high of price reversal bar within 1-3 months before moving lower.

Historical Stock Chart Example:  Canadian Solar (CSIQ) 2008

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4.  Lower-high and Fail

Price retests the price reversal bar, but can't top its high before moving lower.

Historical Stock Chart Example:  Amtech Systems (ASYS) 2011

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5.  Implosion or Bleed Lower

Price never retests the price reversal bar and moves lower.

Historical Stock Chart Example:  Nordstrom (JWN) 1987

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Note:  In all scenarios, after failing to stay above the reversal bar, price may also trade sideways for months/years without completely breaking down.

Please >>CLICK HERE<< to go to Price Stall Tops.