🧠 Article Five:
Reversal Patterns – Part One: Reversal Patterns
(Reversal Patterns)
Reversal patterns are strong signals for a potential change in the current market direction. John Murphy considers them visual tools that reveal the beginning of a new upward or downward wave.
🔹 1. Head and Shoulders:
A bearish pattern following an upward trend.
A break below the neck line = confirmation of the reversal.
The exact opposite: inverted head and shoulders in a downward trend.
🔹 2. Double Top/Bottom:
Two consecutive peaks → signal for a decline.
Two consecutive troughs → signal for a rise.
Confirmation of the pattern with a break of the neck line.
🔹 3. Triple Top/Bottom:
Less common, but more powerful.
The same logic as the binary patterns but with three rebound points.
✅ John Murphy advises not to rely on the pattern alone, but to wait for a break with strong trading volume to confirm the reversal.
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🔍 This is information, not a recommendation, and the market always carries risks, think with your mind and make your decision with your hands.