PATTERN EXPLICATIONS by Technical Analysis, Inc.
In Figure 1, the first pattern shown (A), called "meeting lines," is a gap opening and an unchanged close.
This pattern indicates that the market direction is unclear or it is the conclusion of a trend. With the %D
above 80 at the time of this pattern, a potential reversal is indicated. The second pattern is a "hammer"
(B). Hammers have a small real body with a long lower shadow with a small or no upper shadow. This
pattern indicates a bottom as the market is hammering out a base. This particular time the pattern was
early, but with the %D below 20 the warning of a reversal was accurate. The "shooting star" (C) has a
small body near the lows, short lower shadow and a long upper shadow. This pattern is bearish in an
uptrend. The shooting star with the %D over 80 was a good call. The last formation shown is the meeting
lines (D). The %D below 20 and the meeting lines pattern signaled another change in the trend.