Two Day Reversal

Two day reversal is a signal that is provided in a bottom pivot or a top pivot. A two day reversal consists of two bars.

A two day reversal in a bottom pivot means that today's closing price is in the upper 20 % of the bar and that the previous day's closing price is in the bottom 20 % of the bar. A two day reversal in a top pivot means that today's closing price is in the bottom 20 % of the bar and that the previous day's closing price is in the upper 20 % of the bar. A stop-loss for a two day reversal is placed at the last bar's minimum value when there has been a buy signal and at the last bar's maximum value when there has been a sell signal.

A buy signal for a two day reversal in a bottom pivot is given the next day if the highest level in the latest two day reversal bar is passed. A sell signal for a two day reversal in a top pivot is given the next day if the lowest level in the last two day reversal bar is passed. When you act on two day reversal signals, the decisions are always taken in the direction of the trend. Two day reversal signals are triggered in recoils of the dominant trend.