Down Goes Crude Oil on a Mirror Image Rounded Reversal
Mon, Oct 31, 1:11 PM ET, by Corey Rosenbloom
The “Rounded Reversal” or “Mirror Image Foldback” is one of my favorite chart patterns yet most traders rarely see it develop.
Crude Oil gives us an example of this stealth reversal pattern as a perfect “Mirror Image” pathway develops.
Let’s look at the chart, study the pattern, and plan the future:
First, let’s start with a few quotes from this week’s Intermarket Strategy Planning Report I published for members:
“We went into last weekend expecting a movement DOWN AWAY FROM the $50 level on divergences and weak price action and – so far – that’s precisely what we’re seeing.”
“Look to play toward the $45.00 level which is best seen on the Daily Chart.”
“Focus your attention now on the $48.00 level which is the rising 50 day EMA – IF price fails to bounce/rally here, THEN we’ll expect a continued sell-swing lower toward the $45.00 pivot.”
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In terms of the “Rounded Reversal” or “Mirror Image Foldback” Pattern, the trigger to enter short was the break beneath the $50.00 per barrel level.
Very, very aggressive traders could have started small-lot short-selling on the divergences and initial movement down away from our $52.00 per share target (beginning October 19th).
Nevertheless, the pattern suggests additional downside action similar to the upside action that created the left side of the pattern.
The right side of the pattern – what’s tradable – should continue to look similar (as is the case currently) to what we saw on the left.
The vertical black line represents the “Mirror” or Midpoint of the pattern.
Continue studying this example and similar “Rounded Reversal” examples and get ready to trade them in real time!
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Corey Rosenbloom, CMT
Afraid to Trade.com
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Corey's book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
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