What's a weekly reversal and how does it work? Here's a refresher on this intriguing formation.
Maybe you’ve felt it. Every once in
a while, you feel really good.
You begin to believe that you know
everything there is to know about
a subject. You know that’s not
true, but the feeling persists. And
such was the case when I started
reading analyst John Murphy’s
latest work, The Visual Investor.
After reading the first chapter,
however, I knew I was wrong; I didn’t know everything there
was to know about technical analysis. I discovered weekly
reversals. So what are they and how well do they really work?
I decided to find out.
WHAT’S A WEEKLY REVERSAL?
Murphy defines a weekly reversal and shows two examples:
The weekly reversal is another simple market formation that’s
worth looking out for. An upside weekly reversal occurs during
a market decline and can be seen only on a weekly bar chart. A stock starts the week with a lot of selling and usually breaks
under some type of support level. By week’s end, however,
prices have turned dramatically upward and close above the
previous week’s price range. The wider the weekly price bar, and
the heavier the trading volume, the greater the significance of the