Trading stocks education - Trading tactics & examples

One Day reversal is the starting point for most reversal patterns. After an extended rally the stock gaps higher at the open to trade at a new high on a positive news announcement. As the session proceeds volume expands significantly but by the close the entire rally disappears and the stock closes lower.

One Day reversals are by definition one day events and as such technical targets are not implied but if you look at every major reversal pattern you will quickly see that it all began with a one day reversal.

Island Reversal           Rising Wedge