Bar reversal pattern

Bar reversal is a classic pattern in western chart analysis. Although I mainly use the japanse candlesticks but sometimes the bar patterns are more useful. The recent price action shows the difference between these two display techniques.

The SPX index which has two bar reversal candles on Sep 23 and 21 Oct. On both days the index opened at the higher and then made a new top but closed below the previous lows. Thats what a classic bar reversal is.

Same pattern can be seen in Nifty on Oct 1 and Oct 10 whcih are bar reversals.

Now we will analyse the same dates with candlesticks.

First SPX on 23 Sep made a bearish engulfing pattern. This kind of pattern is a bearish pattern and its intensity increases if it occurs at top. The second candles stick on 21 Oct can be said kind of shooting star which again is a bearish pattern signifying the top formation.

Second in Nifty the respective candles are evening star and shooting star.

The conclusion we can draw form all this is that

1. The bar reversal pattern has occured right at top and predicted the reversal while the candles do have bearish implications but the power of prediction was not that strong (leaving the evening star formation in Nifty on 23 Sep.)

2. In candles the shadows (i.e. the wicks) play less important role than they in bars.  In candles the real body is more important.

3. Both the bar reversal patterns have occured at the end of wave.

The occurence of two bar reversals within span of 1month is a major -ive events for the markets. Although I did not pointed the same as early as possible, I will try to point out such patterns as soon as possible going forward.