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 Wednesday, 4/2 for Thursday's market.

Holding..
Dow pulls back from 12,700, closes lower by 45 points

» Market Direction with Ed Downs

Charts of the Day Courtesy of Nirvana Systems

NYSE Chart of the Day
with Jeff Drake

After breaking through the bottom of the triangle a few days ago, PBY reversed from lows and tested the lower boundary from underneath before heading back to new lows. This pattern is typically quite bearish. Look for more weakness ahead.

Pep Boys Manny April 2, 2008

NASDAQ Chart of the Day
with Jeff Drake

UTIW has traded within the boundaries of a clear, downtrending channel over the last 14 months. The stock is now holding at the upper boundary of the pattern at 21.60. Watch this zone for a breakout or another drop back toward the bottom of the range.

Uti Worldwide Inc April 2, 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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