Gap Signal Reversal Bar - The Rookie Fooler

Another Reversal Bar that’s easy to spot on a bar chart or a candlestick chart - and one that would be totally missed on a line chart - is the Gap Signal Reversal Bar. The gap means that price opened beyond the range of the previous bar and stayed beyond that range for the entire trading period. Gaps occur more freqeuntly on commodities and forex charts than on stock index charts but the implications are the same across the board.

Not every gap bar is a reversal bar. For the bearish version price must open in the top 1/3 of the gap bar and close in the bottom 1/3 of the gap bar. During the session you won’t know where the close will occur until it happens but in a bull trend this bar should get your attention once price drops below the open.