Hook Reversal Pattern
The hook reversal has the same bar as the Open-Close and Closing Price reversals, but it is positioned differently in relation to the range of the previous day.
After an up-trend:
- The Open must be near the High,
- The Close must be near the Low, and
- There is a lower High and higher Low compared to the previous day.
After a down-trend:
- The Open must be near the Low,
- The Close must be near the High, and
- There is a lower High and higher Low compared to the previous day.
Remember:
The signals are most reliable if they occur after a strong trend. If the trend is weak, so is the signal.
Author: Colin Twiggs is a former investment banker with over 30 years experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary newsletter.
Colin also writes The Patient Investor newsletter which focuses on the global economic outlook and key macro trends.
In addition, he founded PVT Capital (AFSL No. 546090) which offers investment strategy and advice to wholesale clients.