Darren Winters

Darren Winters of Win Investing’s Reversal Type 4:

Darren says “My fourth reversal type is the Bearish Three Inside Down – once again this formation begins with a large up move but is then followed by an inside trading day with a very small range. Confirmed with another bearish day with a close at or below the lows of the first trading day.”

Darren explains “This move starts of with large bullish price rise in anticipation of a news release from the underlying company or favorable economic conditions. The day closes at the top of its trading range indicating that trend is intact. The small wick at the top of the candle is most likely created by day traders closing their positions at the end of the trading day. – Darren Winters”

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Darren Winters of Win Investing explains yet another Reversal Type, 3:

Evening Shooting Star

Darren explains “this patterns forms with a continuation of a bullish followed by a day with a significantly smaller trading range. The first two candles suggesting a loss of bullish sentiment or uncertainty over short term market direction. If on the third day the market has a strong sell-off an evening shooting star is confirmed. – Darren”

Traders’ psychology behind the first day is relatively clear; it is merely another bullish run-up. The small range of the second day indicates decrease in demand, generally driven by lack of supporting news behind the strong bullish trend and anticipation of future direction. If this does not happen in the coming day a sharp sell-off is likely to follow as people exit the trade and start taking their profits. A large bearish day confirms the set-up and signals a reversal pattern.

“When encountered by such a situation I would not be tempted to sell until a day when the price closes below the low of the first day as only then the bearish sentiment is said to be truly in place. Price will often consolidate within the body of the bullish candle for days trading in small ranges. Darren also added If this pattern presents itself, one can say that the market is still anticipating external news. Once this occurs a new direction will follow. Thus selling the stock early could lead to loss of opportunity. Alternatively market closing below the bearish day confirms the new direction. – Darren Winters”

Darren Winters of Win Investing explains his Reversal Type 2:

He says “The next reversal is the Dark Cloud Cover – this formation is often seen in current markets where a strong bullish move follows a very strong bearish move.”

Darren adds “Notice how on the first day the market closes very strongly up, almost at the top of its trading range. There is no indication of a reversal to follow. This is what I call, reversal caused by sudden adverse market news just before or just after the market opens.”

After the first day of strong buying, end of day traders place their multiple buy positions for the following day’s open.

Darren explains “this causes the market move slightly upwards following which particular news is announced. This then causes a domino like effect where sellers out compete each other for best price, hence the price plummets. If the news was released overnight or at the end of yesterdays closing day, them market would show a sign of reversal on the first day or would open sharply down (gap at open).”

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The follow articles contains Darren Winters’ information about Reversal Types

Darren’s Reversal Type 1.

Abandoned Baby – a rare but powerful reversal pattern characterized by a large bullish move upwards, followed by a small doji candle which gaps above the previous day, then shadowed by a bearish candle with a large down move.

Darren Adds “This formation is characterized by a sharp reverse in market sentiment for the underlying share. Now let analyze what human emotions may be driving the market in this setup.”

“First the price accelerates upwards as the confidence soars. This is a domino like effect when sharp rise in price encourages more and more buying demand, thus the creating a very bullish day – Darren Winters”

For Darren Winters of Win Investing.

The following articles include Darren Winters’ Reversal Types

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For Darren Winters of Win Investing.