If you follow chartist, you will often hear them speak of a “Trend Reversal” signal — derived from some pattern seen in candlesticks. One of the key elements to this however, is that confirmation is required from the next candlestick – to in fact confirm the Trend Reversal.
Some examples of the TR signal are:
- Inverted Hammer
- Shooting Star
To help illustrate, I bring you the Daily chart of $CRI (Carter Holdings):
As noted on the chart, there has been a continual decline since the Shooting Star towards the end of April. This decline has in fact confirmed this TR signal, thus making it valid. A clear example that the upward trend has indeed reversed.
Price is currently hovering above the 50 day moving average (tested once this week already) and looks destined to test it once again soon. Play the reaction if no position.