Reversal and Pullback Patterns
by PRASHANT SHAH -
Breakout patterns discussed so far were relatively simple to identify. A proper understanding of those setups will help you to better grasp the concepts and patterns explained in this section,which are relatively more advanced. Before considering reversal patterns, it is important to understand the difference between continuation and reversal patterns. Continuation patterns are those that ... Read more
Strike-Back Pattern
by PRASHANT SHAH -
We discussed the swing breakout pattern earlier. In the case of reversal patterns when the price moves back into the swing breakout territory, it is an early sign of a potential trend reversal. When bulls or bears strike back, it is an early indication of a potential reversal. A little further research helped me formulate ... Read more
Swing Engulfing
by PRASHANT SHAH -
I have borrowed this concept of engulfing from candlestick chart patterns. A bullish engulfing candle is one where the current price completely engulfs the body of the previous candle. With Renko charts, we plot a series of bricks which show price swings. When a swing move completely retraces the previous move, which was a swing ... Read more
Weak Breakout Patterns
by PRASHANT SHAH -
Bullish weak breakout (left) and bearish weak breakout (right). When the price forms a bearish swing breakout (A), but fails to record more than two bearish bricks thereafter (B), and instead again turns back above the swing breakout brick (C) , it is a bullish weak breakout pattern. Correspondingly, after a swing breakout (A), if ... Read more
Renko ABCD
by PRASHANT SHAH -
Harmonic patterns are popular reversal patterns. One can refer to the book written by Scot M. Carney for a more detailed study of harmonic patterns. ABCD is a popular harmonic pattern for trading reversals. I have incorporated it into Renko, considering the advantage of objectivity offered by Renko bricks. ABCD is a three leg pattern, ... Read more
Principle of Polarity
by PRASHANT SHAH -
The polarity principle is a very popular concept in technical analysis. The phenomenon of a prior support turning into resistance when broken — and vice versa — is the essence of the polarity principle. Polarity is applicable on Renko charts, too. The polarity principle provides an effective pull back trading method and Renko brick reversal ... Read more
