Reversal bars are an objective technique used to time the entry of a trade. When pattern, price and time all come together at a suspected major pivot, and you hesitate while wondering if the prior trend will continue against your new position, a reversal bar can be the objective trigger to prompt you to take action.

Market Direction Courtesy of Nirvana Systems

Updated Tuesday, 5/20 for Wednesday's market.

Back to 12,800...
Dow drops sharply at Open, rests at 12,800 fulcrum

» Market Direction with Ed Downs

Charts of the Day Courtesy of Nirvana Systems

NYSE Chart of the Day
with Jeff Drake

HA has formed a clear head-and-shoulders pattern at highs after rallying from 4.50 to 9.00 over the last two months of trading. This pattern is typically very bearish and a break at the neck line at 6.70 could spark another move back toward the 4.50 level.

Hawaiian Holdings Inc May 20, 2008

NASDAQ Chart of the Day
with Jeff Drake

UNFI has formed a clear higher low after dropping from above 30.00 since January. This higher lows is also flanked by the bullish breakaway gap, which could lead to much more strength above 20.00.

United Natural Foods Inc May 20, 2008

Lesson of the Day Courtesy of Nirvana Systems

Trendline Breaks

When is a Trend Truly Broken?

The importance of trendlines cannot be overstated when it comes to technical analysis. We are told to trade with the primary trend, exit when the trend reverses, enter on trend reversals, and so on. Trends are easy enough to identify, but when is a trend actually broken?

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