"Psychology is both the reason for the consistently superior performance of the methods the financial academics cannot explain, as well as the consistently poorer results of those approaches that fail. - David Dreman, Fund Manager "
Trader Victor Sperandeo describes one of the powerful top/bottom reversal techniques, In an
uptrend, if prices penetrate the previous high, but fail to carry through and immediately drop
below the previous high, the trend is apt to reverse. The converse is true for a down trend.
This pattern is also called spring. The 2B setup looks like a micro M pattern and signals
trend reversal when prices stop making higher-highs in an uptrend.
The 2B pattern rule is when prices make a new high or new low; they pull back for a healthy
retracement. After retracement, the price tries to re-test the new high or low. When this test of
new high or new low fails, and it does not maintain the prices above the new high or low, it
signals a potential trend reversal. This setup is very powerful and signals the beginning of a
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OTHER RELEVANT CIRCUMSTANCES. PAST PERFORMANCE IS
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POSSIBLE. THE STRATEGIES OR TRADE SETUPS MENTIONED
HEREIN SHOULD NOT BE CONSTRUED AS CONSERVATIVE STRATEGIES BUT
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THERE IS EQUAL OR GREATER POTENTIAL FOR LOSS WHILE USING THIS STRATEGY AND TRADE SETUPS.
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