Pattern: reversal
Reliability: low/moderate
Identification
A small real body forms at the upper end of a trading range with a long lower shadow (the longer the more bullish) with no, or almost no upper shadow.
The Psychology
In a downtrend or within a pullback of an uptrend, a sharp intraday sell-off is followed by a reversal which causes the stock to close near its opening price near the day’s high. This hints at the possibility of a reversal. Bulls most likely were shaken out by the intraday weakness, and shorts start getting a little worried with the bounce. The pattern is a slightly more reliable if the real body is white, but a strong following day on solid volume is still needed to confirm the pattern.
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